Home prices in the Washington area soared about 9 percent in May, spurring hope for a budding housing market recovery.
Prices rose 9.3 percent in May compared with a year earlier, according to a report released Thursday by real estate analytics company Clear Capital. Nationally, home prices increased 6.8 percent — the biggest jump since July 2006.
The Washington area has seen continual price improvement over the last four quarters, said Alex Villacorta, senior statistician for Clear Capital.
“It’s pretty interesting and encouraging to see” that kind of stabilization in the Washington area, he said.
Indeed, mortgage rates holding near record lows, combined with the expiration of the expanded homebuyers’ tax credit in April, have helped propel the market in recent months.
The percentage of bank-owned sales are dropping in the Washington area, Villacorta said — another positive sign for the market. For the period ending in May, bank sales comprised 20 percent, vs. about 37 percent at its worst levels, he said.
» Nationally, home prices jumped 6.8 percent, the largest increase since July 2006.
» The percentage of bank-owned sales dropped to 27.8 percent — a 14 percentage point drop from the same time last year.
» Bank-owned sales still comprise more than 40 percent of sales in Detroit, Las Vegas, Phoenix and Riverside, Calif.
» Richmond showed a modest 1.2 percent year-over-year price gain, and had a bank-owned saturation rate of 19 percent.
Source: Clear Capital
Buyers jumping back into the market — and the return of bidding wars — appear to be helping drive up the prices. Activity was “crazy” through April, said Kent Fowler, a real estate agent with D.C.-based Senate Realty. Activity has slowed a bit in May but is “still busy,” he said.
“With all the demand, I’m surprised prices haven’t increased more,” he said. “Often, it’s between six and 10 offers or more.”
Fowler said that in early April, a client called another agent in his office interested in a $325,000 house in Columbia Heights. The property ended up getting 23 offers — the final one coming in at $400,000.
Fowler said he works with a lot of investors, who are interested in properties in the $250,000-$400,000 range.
While investors can boost demand, Mary Bayat of Bayat Realty in Alexandria sees a downside to them.
“Honestly, in my area I like to see people coming and living in the house,” said Bayat, whose region covers Alexandria, Fairfax, Falls Church and the District.
Investors who can pay cash “grab everything they can,” she added. “Practically anything that comes goes really fast.”
But Bayat said she has clients with decent credit itching to buy who still simply can’t get loans.
“The banks are not making it easy,” she said. “I just don’t understand. Demand is there.”
“God knows how many foreclosures they still have on their books,” she added.
Still, Fowler was confident that the improvement would continue unless something drastic happens.
“As long as the confidence is there, I think we’ll be fine,” he said.
