Sunday, January 23, 2011
How was the DC real estate market in December 2010? How did it compare to 2009?
GCAAR's Dececmber 2010 Residential Real Estate Market Report is out.
In Washington,D.C. single family homes, there were more signed contracts on homes in December 2010 than in 2009 and overall there were more contracts on homes in 2010 than 2009. This could have to do with buyers wanting to take advantage of the historically low interest rates and sellers being more realistic in both how they prepare their home to sell (in terms of property condition)and adjusting their pricing to the market.
Settlements were down in 12/10 compared to 12/09 but up overall in 2010 from 2009.
The median sales price of homes was up in '10 from '09 by roughly $12k. Buyers might have seen the tide turning in the market,with prices starting to go up,which would explain why more contracts were written in 2010 than in 2009. I always tell buyers that December is a great time to write offers on homes because many sellers psychologically want to go into the following year with their homes at least under contract if not sold.
A single family home is almost always a great purchase in Washington,DC because people of the transcient nature of the area. People often move specifically for jobs,particularly during election years. The benefit of single family homes is that you tend not to have monthly association fees (possible in gated community or townhome). You also aren't subject to rules and regulations of the condo/coop building. You are solely responsible for repairs,but the repairs are your decision to make and you award the contractor(s),where as a condo/coop board might make that decision for you. You also might have less noise from neighbors in a home than in a building. If you are looking at attached/semi-attached row houses,try to visit them a second time (look at it the first time during day when you can walk around the outside)in the evening when people might be home,so you can determine for yourself how quiet or noisy the neighbors are. It is all subjective. I suspect it would be least noisy in a detached home.
As far as condominiums and coops in Washington, DC, contracts were slightly up in 12/10 from 12/09 but down comparing '10 to '09. Settlements were down in 12/10 from 12/09 and also down in '10 from '09. Good news on the Median sales price: up c.$6k from 2009. One of the challenges I see is financing, when the ratio of properties owned by primary residents compared to properties owned by investors is so high that they aren't eligible for FHA loans. FHA loans have been extremely popular the last couple of years because they have only required buyers to make a downpayment of 3.5%. Regarding investment properties,many coops have regulations and restrictions on renting units out. They are concerned that rental units will pull down the property values.
A consistent objection to condominiums and coops that I hear from my clients is that the monthly condo fee is too high. Some buildings include the utilities and taxes in the monthly fee,which drives the monthly rate up. Taxes are almost always included in the monthly fee of coops. Some buildings have concierges..and if a concierge is at the front desk around the clock,that is an expense that even further drives the fee up. Other ammenities that drive the monthly rate up are pools and workout facilities in the buildings. Perhaps communities should consider lowering the monthly fees and have people pay for membership at the community pool and gym. They should also look at the cost and benefit of having a concierge at the front desk. Does this really add value? Is it a want or a need? My condominium building decided to eliminate their concierge a couple of years ago as a cost cutting measure. Many,including myself were upset about this and wondered if it would hurt our property values. It would have been less shocking if owners like me bought our homes when there wasn't a concierge rather than seeing the building eliminate the concierge. Another challenge is that not all condo/coop units come with a parking spot and if you own a car,you need to see if anybody in the building you are considering is looking to rent/sell his/her parking spot, find another garage where you can rent/buy a spot,get a street parking permit or way the pros and cons having your car verses selling it and renting a car when you need it.
Well,the good news is that we did lower our monthly condo fee to make our building more attractive to buyers.
Condos and coops are a great alternative to single family homes if you don't want to be responsible for mowing lawns,shoveling drive ways and sidewalks. Furthermore,you share expenses with the community when a part of the property,including a roof needs to be replaced. Further more,the property manager supervises the work for you and is looking out for your interests ,where as in single family home individuals have to interview,hire and supervise the work being done on the home. And,you have no one to share the expenses with.
If you are in the market to buy a condominium or coops,actually read the assocation documents,which is one of the contingencies in the sales contract. You want find out if any repairs will be coming up in the next year or two that will result in an assessment. You also want to look at the rate in which condo fees have gone up or down. Look at the ration of primary residents to investors and the rules about renting your unit out. My other suggestion is if you have been considering a 1 bedroom home but could afford a 2 bedroom home or a 1 bedroom home + den, give thought to doing so. Also,if a home comes with a parking spot,the parking spot will add value to your home when it is time to sell or rent. If your life situation changes a 1 bedroom home can very quickly feel too small. As far as selling your home down the road,there are a lot more 1 bedroom units on the market than 2 bedroom/1 bedroom + den homes. That being said a 1 bedroom home is good to buy and hold for investment purposes when you move out.
All markets are different. If you want to talk about the specific market you live in,are considering buying in,let me know. I am here to help. And,I always have time for your referrals.
Licensed in MD & DC