All-time low interest rates make now an appealing time to buy June home sales overcame market factors that could have slowed the area’s real estate recovery, experts said, sparking optimism for continued strong sales into the fall.
One of those factors, consumer confidence, remains low with an uncertain economy and a volatile stock market. Also cause for concern is the Federal Housing Administration’s announced reduction in the conforming loan limit. On Oct. 1 the amount of money that can be borrowed under an FHA-insured loan will drop $104,250 from $729,750 to $625,500 for the greater Washington area.
Low housing inventory is driving price increases in most areas and interest rates are at all-time lows, making it a great time to buy for those who can get a loan. While August traditionally finds most people focused on vacations and back-to-school preparations, there is a growing sense a strong summer finish will carry into fall.
“This June actually turned out to be better than last year and we still had the tax credit,” said Jon Wolford, managing broker for the D.C. metro area at Long & Foster. “The level of activity still isn’t where I would hope it would be, but the interest rates are still pretty incredible at 4.25 percent.”
Recent data from the Metropolitan Regional Information Systems revealed positive signs in Washington, Virginia and Maryland. Sales of single-family homes in the District rose by 13 percent this June over the same month last year, from 400 units to 452. Sales appear to have been up in July as well.
“We’re having a much better July than last year,” said Donna Evers, president of Evers & Company. We’re seeing multiple contracts on properties and the upper brackets are starting to move. It’s the 14th consecutive month of increased average prices in our area. Anything in the $300,000 to $900,000 range and even up to $1.5 million is hot.”
Evers said the action is in close-in areas such as Bethesda, Friendship Heights, Dupont and the U Street Corridor. Downtown development, an influx of well-to-do young professionals and a burgeoning arts scene have led the city’s rebirth.
“Developers are investing huge amounts of money in U Street. Shaw has a great future. D.C. is becoming more and more like Manhattan and it’s a nicer and easier place to live,” she said.
Northern Virginia home sales decreased overall compared to June 2010, but single-family home sales in the city of Alexandria increased 20 percent from 33 homes sold last year to 44, and in Loudoun County by 25 percent from 267 sold to 333. The average sales price rose by 7 percent over last year.
“My June and July were awesome — overall it’s been very, very good,” said Realtor Karen Trainor of Weichert Realtors in Ashburn. “August will be a good month. I have 20 closings. September will be better. I think things are going to pick up.”
Maryland also fared well. Sales of single-family homes increased by 6 percent over June of 2010 in Montgomery County.
Trainor said buyers in the $700,000 to $800,000 range could be affected the most by the FHA reduction. Buyers used to have a lot of money in the bank, but that is no longer the case.
“I’ll be biting my nails around the probable drop back in the conforming loan limits,” said Suzanne Des Marais, president of the Washington D.C. Association of Realtors. “D.C. is an area that could be especially hard hit as the pool of buyers with good credit may lose a number of options.”
Low inventory also is an issue for the whole area and has led to some multiple offers and bidding wars.
“A normal market has six months of inventory and in most areas we have less than three,” said Robyn Burdette, vice president of ReMax Allegiance in Fairfax. She said that all in all, the market is balanced.
“It’s a stable and fair market for both buyers and sellers. You can get a good house at a good price and everybody wins,” she said.
