Expect a Return to Normalcy in DC Housing Market

Sellers in the Greater Washington DC housing market haven’t faced facts yet.

Prices in most local jurisdictions fell again in December, according to data compiled by Metropolitan Regional Information Systems, but many sellers weren’t ready to come down on their asking prices.

In D.C., the average list price of homes for sale was $538,175, and the median actual sales price was a paltry $388,250.

However, many economists and market observers say the local market will bounce back quicker than the rest of the country due to continued job growth and increased confidence among prospective home mortgage loan applicants who have been sitting on the sidelines.

“Things should look much better in D.C. in the spring,” says Lawrence Yun, a senior economist with the National Association of Realtors. “People will say, ‘I had the financial capacity two years ago, but I got outbid on a lot of houses.’ In 2006, they lost their confidence. But now an improving market for buyers will restore their confidence.”

Median housing prices in most jurisdictions fell roughly 3 to 6 percent in December compared with the same month in 2005.

In Loudoun County, the median single-family home price was $440,000, down more than 13 percent on an annual basis.

Prices should rise close to 5 percent on an annual basis by the end of this year, says John McClain, senior fellow and deputy director of the Center for Regional Analysis at George Mason University.

By 2008-09, prices should get back to the standard 7 percent increase that the region has seen historically. Therefore, those contemplating a home purchase loan application should get started before this rise takes place.