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Regional Spotlight: In Some Washington Neighborhoods, it’s Still a Seller’s Market
Posted By beth On August 16, 2007 @ 1:47 PM In Real Estate | Comments Disabled
RISMEDIA, August 17, 2007—(MCT)—Some real estate markets in the Washington region are thriving despite the slump in national home sales.
Even the most optimistic real estate agent in the area would concede that the region has seen a significant correction in the past few years.
Just last year, total home sales plummeted 15% in the District, 16% in Maryland and a whopping 29% in Virginia compared with 2005.
Foreclosure trends are even worse, with 8,483 in the first six months of 2007, according to Realty Trac Inc., a foreclosure database in Irvine, Calif.
But some neighborhoods in good locations are bucking the trend and seeing climbing median prices this year.
Whether they are near a Metro stop, Capitol Hill or a Base Realignment And Closure military site (BRAC), neighborhoods doing well are all in critical locations.
Take Bethesda, which has several Metro stops (Bethesda and NIH- Medical Center) and a heavy portfolio of local businesses. Median prices in Bethesda for the first seven months of 2007 have increased at an impressive 7.9% pace.
In Anne Arundel County, regional home sales are experiencing a surge of growth as Fort Meade awaits an influx of workers under BRAC.
Many of the prospective sellers surrounding Fort Meade are anticipating the addition of 5,000 personnel and their families over the next five years.
Surrounding communities such as Jessup and Severn have seen explosive growth this year with median home sales increasing 4.6% and 6.1%, respectively, compared with the first seven months of last year.
“BRAC work can have a significant impact on housing markets in the short term and in their neck of the woods the impact will be very positive,” said David Berson, chief economist at Fannie Mae Regional economists said a strong local economy and low unemployment have made parts of the Washington area resistant to the rest of the nation’s housing woes.
“The job market in the D.C. area is very good,” said Mr. Berson.
“When people are looking to buy a house, they ask themselves what their job prospects are like; and when they have a secure job, they are more likely to buy a house,” he said. The Washington region historically has had a lower unemployment rate than the national average.
According to the U.S. Bureau of Labor Statistics, the Washington area had a 3.3% unemployment rate in June, compared with the national average of 4.6%.
Furthermore, the high-paying federal and technology jobs in the region have boosted the incomes of local residents.
“There are high-income jobs in the Washington region and as incomes continue to rise, the home prices will remain resilient,” said Peter Morici, a professor of international business at the Robert H. Smith School of Business at the University of Maryland.
Wealthy suburban communities in Northern Virginia have continued to show strong sales, with median prices in Dunn Loring, Alexandria and Great Falls growing by 5.8, 2.9 and 2.3% over last year, respectively.
Economists said high incomes in the metropolitan area have insulated these neighborhoods from the subprime mortgage problems that have beset many other regions.
“The implosion of the subprime areas impacts the less credit-worthy borrowers,” said Lawrence Yun, chief economist at the National Association of Realtors.
“Those people living in wealthier neighborhoods like Bethesda, Chevy Chase, Alexandria and Great Falls are insulated because they have minimal subprime loans in those neighborhoods.”
Median home prices in suburban communities such as Alexandria have been particularly strong this summer, rising 14.7% in July from July 2006.
In comparison, struggling areas of Loudoun County like Sterling have seen median home prices fall 14% in July from a year earlier.
But other factors such as high gas prices also seem to play crucial role in the strength of some local communities.
“People are going to continue to keep moving into the District,” Berson said. “With high gas prices you are likely to see an increase in demand from people who have decided that it is too expensive to commute long distances.”
Houses in the District and the inner suburbs have remained popular as people try to reduce their costs of commuting.
“The high gas prices are drawing people into the city,” Yun said. “Longer commutes are more costly now than before, and for new home buyers that kind of commute is less attractive than living in the city.”
Copyright © 2007, The Washington Times
Distributed by McClatchy-Tribune Information Services.
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