Reports: D.C.-region home prices should climb in 2010

Home prices in the Washington region dipped slightly from November 2008 to November 2009 and are expected to rise 3.35 percent from November 2009 to November 2010, according to data from First American CoreLogic.

“On average, we are expecting home prices to turn around next spring,” said Mark Fleming, chief economist for First American CoreLogic.

Maryland saw the nation’s sixth-biggest home price decline in November, dropping more than 10 percent, while Virginia’s 2 percent gain was third-best in the country, the report said.

Renewed demand would spur yearly price gains, though the pace of the recovery may be uneven, according to a different study from Metropolitan Regional Information Systems and Delta Associates. Gains would first materialize in the outer suburbs and spread to other areas by the end of this year or early next year, the report said.

Still, the improvement last year was spurred by the federal tax credit for first-time homebuyers, which was extended to houses purchased by the end of April and expanded to qualifying non-first-time buyers. An estimated 1,900 local transactions may not have occurred in 2009 without the credit, according to the Delta report.

This boost from the feds is undoubtedly still on the minds of local agents. Home sales plunged both nationwide and locally in December, prompted by first-time homebuyers rushing to take advantage of the tax credit before its original expiration date.

The eventual removal of the tax credit may hurt the market, said Michael Cerrito, an agent in Prince George’s County, but he added that sales could improve anyway because of good home inventory levels. A “healthy” inventory is about a six-month supply.

But Danilo Bogdanovic, an agent in Loudoun and Fairfax counties, said he would not like to see the tax credit extended again, arguing that it creates a “false market.”

Examiner Staff Writer Alana Goodman contributed to this story.

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