Be Honest Dan, Are We in a BUYER's Market or a SELLER's Market?
So one week we hear the news media discuss doom and gloom about the economy/employment statistics.
The next week we hear great statistics about how housing is in "recovery".
One day, we hear reports that sellers are gaining the upper hand again, but then the next week we hear stories about "GREAT deals still being had for buyers and how "they are in control of most purchases".
What is the truth? Who is right? How can Buyers and Sellers sort out the difference?
The quick and dirty answer is, All of the above is true!!!
But you're telling me, "Dan, that CAN'T be true! Each of those concepts is in direct conflict with the other statements."
My answer to that is, "YUP!!!" I agree with that too". Yet your response is, "HUH???"
The truth is, each situation is unique and CAN contradict the overall current trends.
The fact of the matter is, there are many answers to the current questions and all of them are more or less true depending on the circumstances.
As most folks have come to understand the 3 biggest rules in real estate are: "LOCATION, LOCATION, LOCATION". Right?
But what does that mean? General state/regional location? Specific city/county location? Neighborhood? Block to Block differences?
Again the answer is: "All of the above is true!" Don't assume because you have some (but not all) of the "Location" factors in your favor, that you can capitalize on all of the "Location, Location, Location" principles and benefits. You may be sadly disappointed.
The concept of "Location, Location, Location", can only reliably work in your favor in a perfect world situation. Short of a perfect world situation, you may get varying results!
In "general" the Washington DC Metro area consisting of the District of Columbia, Northern Virginia, and Suburban Maryland are experiencing a robust revival in the real estate market compared to the rest of the country as a whole. OVERALL, sales are up, prices are up, available properties are down and buyers are finding it harder to find great deals. BUT THERE ARE MANY EXCEPTIONS, if you know where to look and consider things outside of your comfort zone.
There persists HUGE disparity between communities and there are many factors causing those disparities.
In the District of Columbia for example, there are a wide range of neighborhoods in all kinds of price ranges. Each of those neighborhoods offer amenities and drawbacks alike. Those factors directly affect the value of homes in those vicinity's ( SUPPLY versus DEMAND = Price and overall realistic salability at that price).
Many high demand neighborhoods like Logan Circle, Capitol Hill, U Street, Dupont, 14th Street, Chinatown, and Columbia Heights all have great amenities like public transportation, retail support, and city infrastructure and development investment which build up DEMAND and in turn competing bids on listings drive prices up and up because buyers want to be there and are willing to pay the prices that those areas demand, credit is available to lend them the money (if they qualify), and high paying jobs in Metro DC are more abundant than other areas of the country.
In some other neighborhoods of DC the housing stock is historically less affluent, there is little to no retail support nearby, public transportation is complex and difficult, and the recent nationwide banking collapse has hit those areas particularly hard with short sales and foreclosures, driving overall DEMAND by buyers down and values as well. It is not uncommon to find some of these areas with 1-2 bedroom condos under $100,000.
Who is snatching those properties up? Small mom and pop investors with CASH who don't need to get a loan to snatch up those great deals. Did deeper and you find that because those condos are purchased by investors who intend to rent these properties out at a profit or hold them for long term investment, the end result is that those condo associations get saturated with rental units rather than owner occupied units and Lenders DO NOT LEND to buyers for purchase of condo units with high renter occupancy's in them. That drastically drops DEMAND, because most of those buyers don't have the cash to make those purchases without a mortgage.
In Northern Virginia similar yet different aspects are at play. Overall the statistics are showing that prices are rising, supply is diminishing and multiple contracts on listings are happening in some neighborhoods BUT NOT ALL!!!
Case in point: Old Town, Clarendon, Courthouse, Ballston, Falls Church City, are booming by all measures and standards. Buyers are slowly losing their edge in those communities because sellers are experiencing greater DEMAND.
Additionally Springfield, Annandale, postal Falls Church (Fairfax County), and Bailey's Crossroads (to name a few) are also experiencing moderate and steady appreciations in values. But many of those areas consist of homes in very specifically between $250,000 for small condos to the mid $600,000's for newer townhomes or remodeled older detached homes, oveal age and architectural style of the homes is 40-60 years, and overall luxury appointments and upgrades are the exception and not the rule.
Transportation in these areas is mostly dependent on vehicular traffic or buses to some extent, and retail support is almost always not within walking distance.
The nominal stature and material condition of these homes for the most part caters to a segment of the population that is looking for that kind of product and price range amenity combination. That translates into good DEMAND for properties in the $200,000-600,000 price range. Sales and transactions in these areas are strong for properties that fit that formula.
HOWEVER, there are also small pockets within these communities that are anomolies to that overall demographic and property definition. There are some neighborhoods in each of these communities that were built in recent years that catered to a much more affluent home buyer in mind and in the robust years prior to 2008 buyers saw the value in buying in those neighborhoods because buying in more established affluent neighborhoods meant spending much more and getting much less for their investment dollars.
In the years preceding the 2008 banking collapse these areas were considered great opportunity investments to buy luxury at more reasonable prices, even if it meant that the surrounding areas were demographically drastically different than the low-mod income rentals and modest detached homes nearby. In those days DEMAND was great in those neighborhoods because SUPPLY was so limited unless you went into much more expensive neighborhoods in Alexandria City or Great Falls, Vienna, McLean.
These small pocket neighborhoods of affluent homes contained within surrounding areas that are demographically drastically different in nature are still suffering deeply and the resulting expectations that buyers and sellers must consider is where that puts them today financially, and also in the future.
No amount of creative marketing/promotional bells and whistles are going to entice buyers to purchase homes where they are not naturally inclined to consider unless the price is overwhelmingly considered too good to pass up.
So the summary discussion whether you are a buyer or a seller, an owner occupant or an investor, be sure to consider all of the aspects of your location, location, location and the supply versus demand coefficients before making rash decisions about your future and your investments.
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