With the D.C. area among many
analysts’ top markets for 2015, the area should see above-average growth
throughout the year compared to a somewhat average 2014. (Washington Blade
photo by Michael Key)
Let’s be honest about the 2014 real
estate market: It wasn’t exactly the greatest year for growth in Washington,
D.C. As of the end of November this year, the number of units sold in
Washington, D.C. has increased 4.13 percent. Sure, growth is always great, but
when compared to the same time last year, the area had seen a 14.14 percent
increase in total real estate units sold compared to 2012; albeit, 2013 was a
year that was overall much more productive than 2012, perhaps explaining the
sluggish 2014.
As we look forward to 2015 it is
essential to associate the mild 2014 as an indicator for the positive direction
the Washington, D.C. market will turn next year. Nationwide, the National
Association of Realtors (NAR) predicts that the number of sales of existing
single-family homes will increase by 5.8 percent in 2015 with the median price
rising by 5.2 percent. Compared to the current D.C. climate, this is already an
increase in the percent change from 2013 to 2014 (assuming an average over 4.2
percent growth through the year’s end). However, when shifting from the
national market to the D.C. market, many analysts predict that the local market
will be one of the top markets in the country for 2015 due in large part to the
equity that has been built up through a market with limited inventory than
comparably size metro areas.
Besides a greater growth in the
number of properties sold, other indicators will likely continue to recover in
2015. Overall, 2014 saw a near 14 percent decrease in the average days on
market for all properties (from 43 days in 2013 to 37 days in 2014). Due to a
market that will likely surpass the national growth, it may be safe to assume
this decrease in average days on market will continue. Furthermore, with a more
balanced market between the buyer and the seller, we can expect much more
equitable deal making across the board according to Coldwell Banker’s top agent
James Braeu. This means good news for new buyers to the market as D.C. has
often been associated much more with a seller’s market.
What about the individual,
taste-specific market trends for real estate in D.C.? According to the MLS, the
greatest appreciation for home purchases in the city has been outside of the
downtown area. From the Southwest Waterfront to Cleveland Park to Hillcrest
(the area with the greatest appreciation), home values are generally
appreciating more outside of the traditional downtown neighborhoods (though
this trend has been predicted for years because of a limited inventory in the
most urban settings). Another predictor of this growth in a more suburban
setting is the presence of a boomer generation upgrading from a 1-2 bedroom
condo to a much more spacious single-family home. As predicted by Michael
Marriott and Stanton Schnepp, two of Coldwell Banker’s top real estate agents,
sellers are cashing in on their condominium’s equity and taking advantage of
low interest rates in order to purchase a fee-simple house. Their new mortgage
is normally equal in value to their condo when factoring in the cost normally
associated with a condo fee.
Now, what about paying for your next
home? One standout in 2014 was truly the drop in interest rates. From January
of this year, rates were averaging at or around 4.3 percent. Over the course of
the year, the national interest rate has dropped for most to at or below 4
percent. For 2015, rates are predicted to increase sometime in the next six
months and continue this cycle for the next two years. Thus, for buyers hoping
to lock in a great low rate on a mortgage, the time to buy is truly in 2015.
In summary, perhaps it is somewhat
safe to have optimism for the 2015 real estate market when compared to our mild
2014. With the D.C. area among many analysts’ top markets for 2015, the area
should see above-average growth throughout the calendar year compared to a
somewhat average 2014.
Tim Savoy is a real estate agent with Coldwell Banker Residential
Brokerage, Dupont Circle. Reach him at 202-400-0534 or timothy.savoy@cbmove.com.
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