With the nation in the throes of a widespread housing market slump, the local real estate market has quickly turned in favor of buyers as many sellers drastically reduce their asking price in order to move languishing properties.
“Last year when you didn’t have any inventory out there you could ask for more because it was a supply and demand situation,” said Karen Kuchins, a realtor with Chevy-Chase based Gerlach Real Estate. “Now there’s such a greater inventory out there, you’re house has to be priced right.”
Like many agents, Kuchins was forced to lower the price on one of her listings in order to sell it. The one-bedroom co-op in Bethesda’s Promenade Towers was originally priced at $324,000 in March. By the summer, Kuchins cut the price to $299,000.
“(Sellers) cannot be asking the prices they asked for a year ago,” Kuchins said. “Buyers are taking their time … before there wasn’t an opportunity for that. You had to take what you could get.”
Nationwide, the housing market continued to trend downward in July with sales of existing homes down 11.2 percent from July 2005, according to figures released last week by the National Association of Realtors, and inventory levels rose 3.2 percent. In suburban Maryland, those figures were even more pronounced. In Montgomery County, inventory was up 146 percent from July 2005 to July 2006 and settlements were down 34 percent for single family homes. In Prince George’s County, inventory was up 178 percent year-over-year, while settlements were down 21 percent.
“There are a lot of buyers that are afraid they’re going to be the one that goes out and buys at the absolute highest price,” said Sharon Chamberlin, a realtor with McEnearney & Associates. “So buyers are hanging back and won’t put an offer on a house until its reduced … if there are five houses that come on the market and all of them are the same, they’re going to wait for one to be reduced.”
Chamberlin reduced one of her North Arlington listings earlier this month from just under $550,000 to $499,900.
The home sold at that price, but “last year it would have sold for over $500,000 and it would have sold in one day,” Chamberlin said. “In North Arlington, to buy something under $500,000 is unheard of.”
But the fact that buyers are seeing so many “Just Reduced” listings may kick start the market, said David Lereah, chief economist for the National Association of Realtors.
“Many potential homebuyers have been on the sidelines, some ‘kicking the tires,’ but mostly waiting for sellers to compromise on prices and terms,” he said. “Now sellers in many areas of the country are pricing to reflect current market realities. As a result, there could be some lift to home sales, but it’ll likely take some months for price appreciation to rise.”
