Several international investor clients recently asked me for information on the current market in the Washington DC area.  Here are some of my thoughts, as presented to them in a longer study on the rental market in the area.

1.     WHY NOW? THE BEST BUYERS' MARKET IN 10 YEARS

  •·        Huge inventory of unsold homes, more sellers competing for fewer buyers. This means more negotiating power for buyer.

•·         Many foreclosures (bank-owned)  and short sales (when owner cannot sell property for as much as he owes the mortgage lender)

•·        These distressed property sales are exerting a downward price pressure on the "normal" sellers

•·        The "normal" sellers will be putting their properties on the market soon, during the usual "spring market", thus adding to the inventory, and adding to price pressures

•·        Prices have already returned to levels not seen in years. According to the 12/21/2008 Washington Post, average sale price in Nov 2008 for the metropolitain area was $343,000 which is a return to March 2004 levels. In Northern Virginia, prices are back to October 2003 levels. In suburban Maryland prices are back to Feb. 2005 levels. In Washington DC proper prices are overall quite stable, though there are distressed properties for sale as well. The farther away from the center of the metropolitain area, the more prices have dropped (inside Beltway/close to Beltway versus far from Beltway)

•·        Interest rates are at an historic low and the federal government is committed to keeping them low for the foreseeable future

•·        Lists of selected foreclosure and short sale properties, as well as other good opportunities, are available upon request.

2.     WHY THE WASHINGTON DC AREA? STRONG LABOR & RENTAL MARKETS

•·        Despite the recession, the Washington DC job market remains stronger than the rest of the country, and major cities around the world.  The area's unemployment rate rose to 4.4% at the end of 2008, which is still enough to make many world leaders jealous.

•·        Lower-paying jobs in the area are being replaced by higher-paying jobs for more skilled labor in the DC Metro area, according to the Center for Regional Analysis (Wash Post 12/21/08)

•·        While the new Federal Base Closing (BRAC) legislation is shutting down many military bases nationally, it will add over 50,000 new jobs in Maryland in the coming years, including 2,500 in Bethesda.

•·        The influx of professionals seeking employment in and around the new Obama administration, as well as the creation of more jobs in the Treasury Department and other sectors involved in the federal government "bail out" efforts, will add to the strength of the rental market.

•·        The people who have lost their homes to foreclosure still need someplace to live, and are turning to renting

•·        "Rents will continue to rise" in the Washington DC area, according to the Aug 30 2008 Washington Post, after posting an increase of 3.1% in 2007. 

•·        As for future resale values, our crystal ball is a bit cloudy. But according to a Harvard University study, home prices in the USA have increased on average 6% per year over the last 30 year period. Sooner or later we will return to a normal market with price appreciation. But we will not know we've "hit the bottom of the market" until prices begin to climb up,,,

For more information and a confidential consultation regarding your needs, please contact me at 301-575-4915 or email today.