Moving to the Washington DC area? What's happening in the real estate market.
I'll get to the point now: it's a seller's market in the Washington DC (DC) area. That means there are more buyers ready to buy than sellers ready to sell. You will have fewer houses from which to choose, and that frequently leads to bidding wars, with buyers offering $10,000, $20,000, even $50,000 above the list price to be the highest bidder.
A lot of home shoppers are turning to new homes, because new home builders have inventory to sell. That's the good news; the not so good news is that builders have a backlog of homes waiting to be built. Most of the builders are telling customers that their house will begin construction in October for contracts written now, in May, 2021, and finish the end of December, 2021, just in time for the holiday season in your new house.
What can you do to be the winner in a bidding war? First, pay all cash if you have it. If you are financing a portion of the purchase with a mortgage PRE-APPROVED, WITH A LOCAL LENDER, not some internet lender located in Washington state who is only giving you a prequalification letter.
A preapproval letter says your loan has been fully processed, fully approved by the underwriter, and close in two weeks, after the title work and appraisal are done.
Know that sellers are wanting quick, two week closings. USAA and Navy Federal Credit Union take 45 days to close, compared to a local mortgage bank that can close in two weeks.
Align yourself with an effective and knowledgeable buyer agent who can work for you, and watch out for your interests. A good place to find an effective buyer agent is from your local loan officer. Loan officers know the good, the bad, and the clueless buyer agent in the area where you want to live.
Be willing to settle fast, but give the seller a 30-60 day free rent-back until you turn over the house; the rent-back is usually timed to when the kids finish school for the semester.
When you find a house you like, don't sleep on it. Especially after a COVID conscious open house. We have seen agents writing up offers on the hood of their cars, then rushing them inside the house to the listing agent.
Remember to take your checkbook for a good faith deposit when you make an offer on a house. A good faith deposit can be $1,000, $5,000, $25,000, or $50,000, or more, depending on how much you can afford. The deposit gets applied to your down payment and/or closing costs at settlement, so it's still your money. Large deposits are an indication of your sincerity when when offers are compared. Oh there will be multiple offers above the list price, even on average houses in average condition.
Some folks give up and say they will just rent. Talk about jumping from the frying pan into the fire. The supply of rental houses is even tighter than the supply of houses for sale. A 4.5 bedroom, 2.5 bath house with a 2-car garage starts around $3,000 per month, and skyrockets past $4,500 because the owners know they can get it in a bidding war. In most nice neighborhoods you can get a mortgage payment that's cheaper than rent.
Finally, high profile economists say this is not a bubble that will burst and send prices sliding down. It's a matter of too much demand, and not enough supply that is forecast to last at least five more years as the millinealls and Generation Z buy their first houses, or move up from their first house. Meanwhile, Amazon has moved over 10,000 to their new east coast headquarters, and expect to move 40,000 more. Other companies that feed off of Amazon are moving thousands of more workers to office buildings near Dulles Airport, leading to traffic gridlock in the Northern Virginia suburbs.
In conclusion, the market is tight, and prices are rising; rising prices will be a good thing as you hold your house for five years. You will have the opportunity to make a lot of money with rising equaty. Your house will be a gold mine when you sell it in 5-7 years.
American Financial Network