With the federal homebuyer’s tax credit deadline barely a month away, Realtors report more urgency from buyers seeking to close a deal in time.
There are more multiple offers, they said, as well as higher prices and a dwindling supply of homes for sale, especially in the Virginia suburbs.
“Multiple offers have been back for months in certain neighborhoods and [for certain] price points when a well-staged and properly priced property comes on the market,” said Tony Hain, a Long & Foster Realtor in Washington. “The dwindling inventory of desirable properties and the deadline to take advantage of the tax credit appears to be increasing the competition.”
February homes sales data reflect that, showing strong price increases over the same month in 2009 in most of Virginia, according to Metropolitan Regional Information Systems.
Every county in the Virginia suburbs showed an increase in the average price of homes sold in the $100,000 to $5 million range. The outer suburbs that were hit the hardest showed the biggest increases, with prices up 24.9 percent in Prince William County and up 13.48 percent in Loudoun County.
Prices rose 17.46 percent in Alexandria, and 7.32 percent and 3.44 percent in Fairfax and Arlington counties, respectively. But prices fell in Washington and the Maryland suburban counties, down 4.77 percent in Washington, 3.22 percent in Montgomery County and 15.31 percent in Prince George’s County.
But everything depends on the neighborhoods and types of housing prospective buyers are considering. There has been a recent boom in sales, for example, in neighborhoods surrounding the Columbia Heights Metro station in Washington, where developers began abandoning or canceling apartment-to-condo conversion projects as the market crashed in 2007 to 2008.
Single-family home sales increased in the neighborhood last year, but the average price fell 11 percent, Hain said. But a boost in condo sales helped spur a considerable increase in studio prices in the area last year, while average prices of one-bedroom and two-bedroom units remained within a percentage point of the previous year’s.
Condo shortage develops
Developers have been offering deals to eliminate what had been glut of multifamily units. Waving condo frees, offering free or reduced garage parking, throwing in design upgrades, and other incentives are common throughout the region.
But as sales heat up, the availability of these offers is shrinking along with the supply of condos, according to Delta Associates, an Alexandria-based firm that tracks commercial real estate data. As 2009 ended, condo concessions averaged 3.6 percent of the purchase price, down from 4.2 percent at the end of 2008.
Delta reports there is now a balance between supply and demand for condos, as measured by the 2.6 years’ worth of units on the market at the current sales pace in the Washington metropolitan area. The year-end report said the inventory of new condos fell by about 40 percent last year while the construction pipeline shrank by half.
As a result, some areas of Northwest Washington (1.8-year supply) and Arlington and Alexandria (1.4-year supply) already are showing a “shortage” of new condo units, which Delta predicted will produce more price increases by the end of this year. But price breaks and other deals are still very common in suburban Maryland, especially in Prince George’s, which had a 22-year supply of condos as 2009 ended.
Other bargain hunters looking to close deals before the second round of federal tax credits expires on April 30 have flocked to the outer suburbs, where prices are much lower. Sellers are finding eager buyers who often are willing to make bids above list prices.
“It’s definitely not like in the beginning of 2008, when buyers had control over everything,” said Realtor Cindy Jones, with Re/Max Alliance in Prince William County. “Now sellers are able to get pretty much what they are asking for if a home is priced properly.”
MRIS reported that the average Prince William home in the $100,000 to $5 million price range sold for $244,605 last month, while the average price in Loudoun was $369,482. That follows a strong fourth-quarter 2009, when the average sales price of outer-suburb homes was up 11.9 percent from the previous year.
While the federal tax credits have fueled the boom in the outer suburbs, the recovery in the core of the region — defined as Washington, Arlington and Alexandria — has also been helped by a loosening of lenders’ purse strings, according to Realtor Donna Evers, president of Evers & Co. in Washington. She noted that banks are willing to offer 30-year fixed loans of $1 million to borrowers making 20 percent down payments. Even $2 million loans are available for buyers who can afford 30 percent down payments.
“As the ice thaws, we’re positioned to have a very productive spring, with low interest rates and banks better able to make loans up to $2 million,” Evers said in her February market report.
The regional core’s average sales price in the fourth quarter rose to $486,328, up 2.2 percent from the third quarter. That was 2.2 percent lower than the fourth quarter of 2008, but both Arlington and Alexandria showed year-to-year increases in December and January. In Washington, the average price was up 14.6 percent in December 2009 compared to the previous year but down 7.4 percent last month from January 2008.
The data reveal just how important location is. In the Dupont Circle submarket, for example, the average sales price jumped 29 percent to $1.6 million in 2009, thanks largely to the $12 million sale of an embassy-size home in the neighborhood, Hain noted in his year-end report.
But the area’s most populated counties remain weak spots, as sellers face pressure from the increasing number of foreclosures.
The weak performance of the area’s inner ring of Montgomery, Prince George’s and Fairfax counties (including Falls Church and Fairfax cities) last month follows price declines of 5.4 percent during the fourth quarter of 2009 from the previous quarter. And the bottom continues to fall out of the market in Prince George’s, where the average price tumbled 20.6 percent to $200,271 in January over the same month in 2009. Despite a continuing surge in sales — up 82.7 percent last month — over the prior year, the average price has fallen 47 percent from $377,611 in January 2007.
