The Volokh Conspiracy - D.C. Real Estate Market Update:

The Washington Times says that July was the toughest month to sell a home in D.C. since 1997.

It's very hard to get a handle on what's going on, because statistical comparisons often involve comparing apples and oranges. For example, I've noticed that much nicer properties seem to be on the market now than last time I was seriously following things, in the Winter of 2005. Then, not only did prices seem outrageous, but the vast majority of homes for sale were dreck, as if everyone with a crappy house was taking advantage of the bull market in housing to sell, and anyone with a nice house was waiting to sell. (I also suspect that sellers' agents "fed" many of the nicer houses to their buyer clients before the properties formally went on the market, the better to get a double commission.)

But I can provide one piece of apples to apples evidence. In February '05, my wife and I looked at townhouses in a development in Alexandria called "Quaker Hill." It's not walking distance to the metro, but it is well inside the Beltway, and is across the street from large, beautiful single family houses. At the time, the asking price for standard three and four bedroom townhouses there ranged in price from $520K to $580K (for a model about 15% larger than most). Also at the time, houses were routinely selling in one weekend for more than asking (we bid instead that weekend on a wonderful house in Falls Church, offering 50K over asking, and didn't even come close). Checking the real estate sales from last Fall on the Alexandria website, these same homes were selling from the high $500s and up. Prices started to gradually decline, but in the mid-Spring sellers could still get in the low mid-500s for the regular-sized homes.

By July, the sweet spot seemed to be around $530k. One seller, MLS AX5588111, dropped his price on July 15 from an initial $594K to $529K, with a new listing text that started "$529,000! $529,000!." The house was off the market within a day or two, assumedly sold.

But suddenly, since then, sellers can't get even $529K. One seemingly desirable unit, an end unit with a garage (MLS AX6098109), "recently updated", has been reduced to from an initial $549K (and later $529K) to $515K with $5K closing cost help, effectively $510K. Almost a week later, it still hasn't sold. Two other houses in the development are selling for $525K, and one for $529K.

In short, at least in this one large townhouse development in Alexandria, prices are now lower than they were in February 2005. (But don't feel too bad for the sellers, most of whom originally bought these houses in the early 90s for a bit over 200K). Mortgage payments, however, would be higher than they were in 2/05 because of higher interest rates.

I make no claims that this reflects anything beyond the prices in this one particular development, and, even if it did, it's worth keeping mind that in a down market condos and townhouses tend to decline more, and more rapidly, than single-family homes. Also, while some of the bubble markets (especially No. Va., Boston, South Florida, Phoenix, and Las Vegas) seem to be rapidly contracting, prices are still rising in other parts of the country. But I think it's interesting anecdotal data nevertheless, and is consistent with the Times' claim that the market has slowed down considerably of late.

	[David Bernstein, August 18, 2006 at 1:20pm] Trackbacks D.C. Real Estate Market Update: The Washington Times says that July was the toughest month to sell a home in D.C. since 1997. It's very hard to get a handle on what's going on, because statistical comparisons often involve comparing apples and oranges. For example, I've noticed that much nicer properties seem to be on the market now than last time I was seriously following things, in the Winter of 2005. Then, not only did prices seem outrageous, but the vast majority of homes for sale were dreck, as if everyone with a crappy house was taking advantage of the bull market in housing to sell, and anyone with a nice house was waiting to sell. (I also suspect that sellers' agents "fed" many of the nicer houses to their buyer clients before the properties formally went on the market, the better to get a double commission.) But I can provide one piece of apples to apples evidence. In February '05, my wife and I looked at townhouses in a development in Alexandria called "Quaker Hill." It's not walking distance to the metro, but it is well inside the Beltway, and is across the street from large, beautiful single family houses. At the time, the asking price for standard three and four bedroom townhouses there ranged in price from $520K to $580K (for a model about 15% larger than most). Also at the time, houses were routinely selling in one weekend for more than asking (we bid instead that weekend on a wonderful house in Falls Church, offering 50K over asking, and didn't even come close). Checking the real estate sales from last Fall on the Alexandria website, these same homes were selling from the high $500s and up. Prices started to gradually decline, but in the mid-Spring sellers could still get in the low mid-500s for the regular-sized homes. By July, the sweet spot seemed to be around $530k. One seller, MLS AX5588111, dropped his price on July 15 from an initial $594K to $529K, with a new listing text that started "$529,000! $529,000!." The house was off the market within a day or two, assumedly sold. But suddenly, since then, sellers can't get even $529K. One seemingly desirable unit, an end unit with a garage (MLS AX6098109), "recently updated", has been reduced to from an initial $549K (and later $529K) to $515K with $5K closing cost help, effectively $510K. Almost a week later, it still hasn't sold. Two other houses in the development are selling for $525K, and one for $529K. In short, at least in this one large townhouse development in Alexandria, prices are now lower than they were in February 2005. (But don't feel too bad for the sellers, most of whom originally bought these houses in the early 90s for a bit over 200K). Mortgage payments, however, would be higher than they were in 2/05 because of higher interest rates. I make no claims that this reflects anything beyond the prices in this one particular development, and, even if it did, it's worth keeping mind that in a down market condos and townhouses tend to decline more, and more rapidly, than single-family homes. Also, while some of the bubble markets (especially No. Va., Boston, South Florida, Phoenix, and Las Vegas) seem to be rapidly contracting, prices are still rising in other parts of the country. But I think it's interesting anecdotal data nevertheless, and is consistent with the Times' claim that the market has slowed down considerably of late.