The Washington region’s housing market is springing back, and experts have just one piece of advice for those expecting to find a steal in the next several months.
| Sizzling scene | |||||
| Year-over-year home price changes: | |||||
| March | June | Sept. | Nov. | March | |
| 2010 | 2010 | 2010 | 2010 | 2011 | |
| Washington region | +7.1% | +7.0% | +7.4% | +7.5% | +8.3% |
| National | +5.1% | +8.8% | +3.2% | -2.7% | -3.8% |
| Source: Clear Capital | |||||
“Go to Detroit,” said Urban Land Institute housing expert John McIlwain. “There are some really great bargains out there.”
Not so in the District and its surrounding suburbs, where prices — while not nearly as high as they were during the housing boom — are far from steals. Instead, you get what you pay for. And in this region, land doesn’t come cheap.
“Those tall tales of million-dollar homes going for $400,000 — they don’t exist,” said Joe Doman, a Northern Virginia real estate agent.
A three-story Mount Pleasant townhouse with early-1900s architecture and interior details is one block from Columbia Road’s retail corridor and is priced at $850,000. But the nearest Metro station is a hike and don’t expect a nice view from the back deck, which butts up against the brick wall of the townhouse around the corner.
A similarly priced foreclosure in Glen Echo is built on a half-acre of unusable hillside. The first level, which is partially submerged in the slope, greets visitors with a powerful musty basement odor, enhanced by the floor’s stone walls.
The remaining floors follow a haphazard layout that seems better suited for hide-and-go-seek than for living.
Real estate agent Erich Cabe said with many foreclosures in the area, buyers are paying for the land. Making the property livable requires a significantly bigger investment.
“Every first-time homebuyer wants to find some crazy deal,” Cabe said. “They want to look at short sales and foreclosures and they’ll usually exhaust themselves pretty quickly. A lot of people forget … that to fix up a place often costs more than buying a property that’s move-in ready.”
Those who make money on foreclosures now are typically developers or contractors who have the money and the means to turn it into a marketable product in a few months, he said.
Meanwhile, homes that are move-in-ready and in good locations are drawing multiple offers and are landing contracts in mere days.
But there is one condition — the home has to be reasonably priced.
It’s neither a buyer nor a seller’s market, McIlwain said.
“You’re buying it at a fair value and it’s going to go up over the years — not dramatically but appropriately,” he said. “And by the way, that’s what you should be doing anyway. The idea of getting a steal on a home is so out of date; it’s so ‘2000.’ ”
That’s also what makes it difficult for some short sales — when a homeowner owes more to the bank than the house is worth — to get an offer.
The short sale price has to be approved by the bank, which wants to recoup as much as it can. That can cause some short sales to be overpriced for their market, especially if a second loan was taken out. One such short sale on a cul-de-sac in Ashburn is spacious, bright and well-kept. It sold for $240,000 in 1995 but the owner took out two loans totaling $250,000 in 2005 and 2006.
Now the home lists at $500,000, too high for a market that offers new homes much closer to town center for $400,000, Doman said.
