The Washington, DC metro area has experienced rapid price appreciation of 26% over the past year and 101% over the past 5 years ( for period ending June 30, 2005, OFHEO.gov). In addition to the usual factors contributing to the housing boom the DC area has had strong job growth due to increased spending by the federal government.However, the boom period is over. The housing market started stagnating a few months ago and is now experiencing very small price declines. Inventory has rapidly increased throughout the metropolitan area. According to this article by Reuters "After hitting a high in May, the number of contracts in Washington D.C. and its surrounding Virginia areas of Prince William, Loudoun, Fairfax and Arlington counties have fallen by about half, according to the Greater Capital Area Association of Realtors. Meanwhile, inventory of houses for sale has doubled and in some cases tripled, and homes are staying on the market 30 percent longer."
The high price preoperties are sitting longer. "Anything over $500,000, especially in the suburbs, is just sitting." said Gay Ruth Horney, of Long & Foster Real Estate Inc. in Maryland's Montgomery County, where inventory rose 5 percent and homes stayed on the market 7 percent longer than in September 2004. "Would-be landlords have discovered that they are not able to achieve rents high enough to cover their mortgages. she said."
Today, I went for a drive through the District of Columbia (DC) and also walked the streets. There were many houses available for sale. On the 1300 block of Taylor Steet NW there were three available houses for sale at 1307, 1301, and 1341.
The house on the right is located in the city proper in a alright neighborhood called Brightwood. The address of the house is located at 1444 Whittier Place NW. The MLS is DC5419971. It is a 3 br 2ba house located on .11 acres. The house is being offered at 650K. Will it sell in a reasonable amount of time? Nope.Inventory is rapidly increasingly in the metropolitan area. In Fairfax County (western suburban county), SFH inventory went from 900 in March to 3300 in August (the latest month they have the data for).
Furthermore, according to DC20009Guy who has been tracking listing for sale via ZipRealty. Listings in the 20009 zipcode ( DC ) are up 159% and DC as a whole is up 68% since Sept. 7. That is incredible. DC2009Guy add "20009 includes Dupont Circle, parts of Adams-Morgan, U Street, and Logan Circle. These areas have seen incredible gentrification (and crazy appreciation) the last few years. For example, my partner and I recently looked at a $499,999 "loft" which was basically just an efficiency."
Due to the rapidly increasing inventory and the changing buyer mentality sellers have been forced to either reduce prices or wait longer for a sale. The market is seeing an increasing amount of "price reduced," "huge price reduction," "price reduced to sell," "25,000 reduction," "price reduced. Must sell," "way below market value", and "just reduced"
The housing market continues to weaken in the DC area. Inventory is surging. The boom is over.
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