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DC real estate rebounding?

Posted by: Prashant Gopal on March 10, 2008


Average home prices in Washington D.C. and nearby suburbs are on the rise, according to data from the Center for Regional Analysis at the George Mason University School of Public Policy.

In the city, average home prices for February increased 3.6% compared to February 2007. In January, average prices jumped 11.5% and have been increasing since October, according to the university group’s analysis of data from MRIS, the D.C. area multiple listing service.

Home prices in Arlington, a Virginia suburb very close to D.C., dropped 3.1% in February after climbing 13% in January. Prices in Alexandria, Va. rose 2% in February.

But more distant suburbs have suffered from an oversupply of new construction. Subdivisions proliferated during the boom where land was more affordable. In Prince William County, home prices dropped 25% in February compared to a year earlier. And prices fell 12.3% during the same period in Loudoun County.

I should note, home prices in D.C. fell 9.4% in December according to the Standard & Poor’s S&P/Case Shiller Home Price Indices report, which tracks sales of the same homes over time and is generally considered to be the best measure.

But John McClain, senior fellow and deputy director for the Center for Regional Analysis, said the multiple listing service data is sometimes more accurate in a down market.

“With the big drop in transactions, their [Case Shiller] data base is more limited,” McClain said in an e-mail. “And they only do single family detached which in down transaction times give them fewer data points. It’s somewhat oranges and apples right now. In normal times, their data [and our data] pretty much track the same curve.”

I would love to hear from folks living in or around D.C. What’s your impression of the market?

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Reader Comments

Jim D

March 10, 2008 04:31 PM

Actually, the MLS data tend to be screwy in radically changing markets of both directions, and the Case-Shiller data more accurate.

You didn't say what their methodology was, but it looks like they're looking at median sales prices when they make their claim.

In the early part of a market decline, sales shift to more expensive homes - pushing up the median even as house prices fall.

So, this is really the same kind of data that the NAR is pushing. Does anyone think that they're credible in their pronouncements anymore? They've only been wrong for 18 months running.

From looking at the CRA home page, it looks like they're fully in bed with the RE/Mortgage industry. They also missed the oncoming housing bust, IIRC.

The big clue was their attack on the Case-Shiller index - while imperfect, it's massively more accurate than some simpleminded median index.

Shame on you for printing disinformation.


March 10, 2008 05:35 PM

What I can tell you is that last year at this time when I was looking for properties on Redfin, there where 140 in my price range inside the beltway. Now I have 64 on my watch list and over one thousand in my price range (most of them junk) with more coming on the market every day. If the market is rebounding, it is not happening in my price range. (<350K). All I see are long times on market and price reductions.

I use to look to CRA as an objective source for information. Half a year of reading has proven to me that they are shills for hire.


March 11, 2008 09:01 AM

Here is what John said in March 2006

"2007 Prices will increase in the range of 0 - 5 %
- by 2008-9 returning to long-term normal of 7%"

Need I say more.

David Jackson

March 11, 2008 09:11 AM

Price are not rising in the Washinton, DC area. Prices are falling. In some areas liike Manasses and other outer suburbs there continues to be a steep decline in prices for housing units. The inner suburbs and DC proper are expereincing much smaller price declines.

Months Supply of homes has risen dramatically in the DC area in general. Expect most areas of DC to expeience nominal price declines of between 7% and 16% this year.

Bubble Meter Blog:


March 11, 2008 09:40 AM

Anyone who argues that DC real estate is rebounding is blowing smoke.

Just look at the inventory numbers.

Jeff Royce, RE/MAX Choice

March 11, 2008 02:19 PM

A key component of the arguments for the direction of the market in the DC area is the amount of inventory on the market. This statistic should be seriously questioned by anybody looking at the market closely because of the large number of short sales on the market.

Short sales, as many but not all know, are houses for sale by owners who owe more on their homes that they can sell them for. Their plan is to get an offer on their house, send the offer to the their bank, and have their banks approve the sale and forgive the difference between the sales price and the amount they owe. The theory is that a bank would take what they can get, rather than going through the foreclosure process.

The reality for buyers is that banks take months to decide whether or not they will take an offer. So a buyer has to be willing to agree to a contract and simply wait until a bank answers. There are very few (though some) of these that have gone to closing thus far. And a buyer who actually needs a house in a reasonable time frame cannot afford to write an offer and wait for the bank.

So many buyers are asking agents not to even show them short sales. Agents of "normal" sales are advertising in their listings that they are not short sales and that they will actually give a response to offers that are made. Even foreclosure sales are advertising that they are not short sales and that the bank will make a decision in a reasonable time.

Buyers who do not look at short sales (especially in price ranges under $600K) in Northern Virginia are actually finding a very thin supply of inventory. The question you have to ask about our large inventory numbers, is how much of it is actually for sale. Are the large number of "short sales" really for sale? Are banks going to approve many of the short sales or are they just trying to put off foreclosures and get a few more payments out of an owner in trouble?

I met with a group of agents yesterday. As a group we came to the conclusion that short sales should not be allowed to be listed on our MLS unless the bank has signed the listing agreement and approved the price up front. That would allow only homes that are actually for sale to be listed for sale. The bank is the one that will approve the contract; they should be the one to sign the listing.

If we allowed only houses actually for sale on the market, the inventory numbers would drop dramatically and give a truer picture of the supply and demand in the DC area.


March 11, 2008 03:43 PM

So how many short sales are there? Surely someone has that number?

(And even if they are 10% of all homes/condos for sale right now--which I believe would be an astronomically high number--inventory of the remaining homes/condos for sale WOULD STILL BE UP 25% over this time last year. Ouch.)

Jim D

March 11, 2008 08:48 PM

Let's not forget that short sales are short sales for a reason - if not sold at short sale, the property is very likely to be a foreclosure at some time in the next two years.

So, if there really are all those short sales, that bodes ill for the future of house prices in the DC area.

Agent-Reality/Max NoChoice

March 15, 2008 02:06 PM

Listen yall, I'm a real estate agent and let me tell you this is the time to buy real estate. Short, Long, or Medium, anyway you cut it, you should buy now before prices goes up. Remember, it's location, location, and location, and the Almighty aint making anymore land, so come on over!
I met with a group of agents yesterday. As a group we came to the conclusion that the MLS should not list every house offered for sale thereby reducing supply, increase house prices, and halleluja, increase commission. But honestly, that is not my primary concern because my job is to sell you a house you can afford while all those foreclosure homes were sold by salespeople who just wanted to maximize their commission. As for me, I aint self serving. I is got integrity! It's not like we are former used car salesmen, even though I once did sell some lemons for handsome price but that's another story. Real estate prices never goes down. Invest in real estate now, be a new millionaire, and enjoy financial freedom. You owe it to yourself for not investing in real estate especially when everybody is "flipping" it.

Just Me

March 16, 2008 04:14 PM

NO way!!!!

Steven W

April 17, 2008 03:03 AM

Are you blind? really? there is no possible way a sane person can honestly say that this is the "best time to buy" , with all the destruction going on around the country and our region? home prices are falling and falling they should, I moved here 4 years ago from living abroad and making quite the pretty penny , me and the wife both and we were astonished at the prices here. We knew that they were unrealistic , so we waited. Invested in rental property, out of state mind you and many of our"friends". aka Realtors , were so sure we would regret not buying then. So we used good, educated judgment and waited and now look . we were in the market around 850K and If we would have done so back then , we would have lost about 15% . and today that same house is on the market for 699K , so please stop trying to trick people into wasting their hard earned money on such foolishness. people will always put their families first and simply walk away from anything that would jeopardize them into living in poverty. mortgage or not. and that my friend in the " American Dream"


May 6, 2008 11:43 AM

My son is graduating from college and has a job in Falls Church. Last weekened we went to look at 1.5 and 2 BA condos under $250K in Falls Church & Arlington. An estimated 25 to 30% of the listings using our criteria were short sales which we did not look at. That left 1 in Arlington and about 15 in Falls Church. He decided to rent for now and wait for the prices to bottom out.


June 7, 2008 11:02 AM

The Case Shiller Index is the Gold Standard for tracking broad changes in home prices.

But it is for the whole Washington region, not just DC proper. For Case Shiller to do it's magic, they need a lot of data, and DC just isn't big enough.

So, there is surely a lot of variation, perhaps even increases in some parts of the District, even if the broad trend has been down.

In Columbia Heights, where I live, condo prices seem be falling slightly and home prices are flat to slightly upward, or so it seems from where I sit today.


June 7, 2008 11:03 AM

The Case Shiller Index is the Gold Standard for tracking broad changes in home prices.

But it is for the whole Washington region, not just DC proper. For Case Shiller to do it's magic, they need a lot of data, and DC just isn't big enough.

So, there is surely a lot of variation, perhaps even increases in some parts of the District, even if the broad trend has been down.

In Columbia Heights, where I live, condo prices seem be falling slightly and home prices are flat to slightly upward, or so it seems from where I sit today.

Thank you for your interest. This blog is no longer active.



BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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