Real Estate Market – 6 Month Update

The Improving State of the Real Estate MarketGraph showing the improving state of the real estate market in our area

Winter is upon us and we look forward to our spring real estate market, which many Realtors will tell you, begins late January into early February. Perhaps this “early start” is due to New Year’s resolutions to move up, size down, relocate, or buy that “dream home”.

Buyers start coming out in droves to view open houses and consider all possibilities of making a purchase in the current market. In most of the Washington DC regions, we have seen a steady drawdown in inventory with only a few sub-markets showing increases (and those are mostly outside The Beltway). While the number of buyers has waned, it is not so great to keep sales from remaining steady.

What is Different in Today’s Market?

The real difference is that there are fewer inventories than over the past few years. Ultimately this is a good trend for home sellers as less inventory means more price stability. We do not anticipate any appreciation in our market this year.

Many buyers in our area and those coming from other real estate markets have not been able to sell their current homes for a profit — many have lost money on homes they purchased between 2004 and 2008.

Buyers that I see today are cautious, taking a lot longer to make a decision about buying a home. They realize that the appreciation gains of the past are not likely to occur again for a long time. They want to buy wisely and for the long term. Buyers who would come to town to buy for a few years and then sell or relocate are a thing of the past. Today, people moving to our area for only a few years, are renting rather than buying.

The Keys to Successful Selling

Price, location and condition are still the most important criteria to buyers. The fewer repairs, updating and redecorating, the better. In our market we still see houses for sale that sit for many months with no results and numerous price reductions. There are also sellers who after months of no results, simply take their home off the market and decide to stay until the market gets better.

Unless a seller is very motivated they may not be successful. Condition and staging have become more important than ever. I listen to buyers going through open houses making comments about needed upgrades and improvements more than ever before. The days of living with tired carpeting, dated wallpaper and older windows is a thing of the past. Buyers want low utility bills, energy efficient upgrades, low maintenance and a user friendly floor plan.

Our Market Remains Healthy

The good news for our real estate market is that we have fared better than most of the country. Sellers are still able to sell in a timely manner if priced competitively. There is no need to be on the market for a long period of time and sellers do not have to accept contracts contingent on the buyers selling their home.

Two Important Changes in Our Industry for Homebuyers and Sellers:

  1. FHA has reverted to their loan limits of $725,000 from $625,000. This will provide a larger buying pool for buyers who have less than a 20% down payment.
  1. Our contracts now provide that homes are sold in completely “as is” condition. Previously our sales contracts stipulated that mechanical, electrical and plumbing in the house would be in normal operating condition. This language has been deleted. The seller is now no longer required to make any of these repairs. Buyers will still have home inspections and will still have the option of requesting repairs or credits for repairs but the seller will be under no contractual obligation.

Looking Ahead

It has always been difficult to choose the very best time to buy or sell a home. Whenever forecasters have tried to predict the bottom of the market, it is usually on the way up. We probably have a more normal real estate marketplace than I have seen in many years, with opportunities for both buyers and sellers. Interest rates still remain historically low, prices have stabilized and there are many good opportunities regardless of your goals.

We look forward to a successful spring in real estate.