Wednesday, March 19, 2014
Federal Economy Powers Housing Market in Washington, DC
The federal government has proven to be both a help and a hindrance to the economy in Washington, DC, throughout the last tumultuous decade. The government's presence provided stable employment that calmed nervous investors during the economic downturn, but the looming threat of a federal shutdown throughout 2013 -- and its in eventual occurrence in October 2013 -- shook investor confidence and prompted a slowdown in the housing market. The median sales price for a Washington-area home fell that following December for the fifth time in six months, from a record high of $440,000 in June to $391,362 in December, according to research by The Washington Post.
Despite the recent downturn, the longer-range trend shows steady growth. The median sales price, the number of homes sold and the number of homes for sale in Washington, DC, were all up in December 2013, compared to a year earlier. The median sales price was more than $30,000 higher than in December 2012 and the highest December-level since 2007. Sales of luxury homes showed impressive gains in 2013; 29 homes sold in the Washington, DC, market for more than $5 million in 2013, an increase of more than 40 percent from 2012.
The Washington, DC, area harbors a low inventory of available housing, down 75 percent from its peak in 2007. There is no relief in sight. According to the annual "Markets to Watch" list published by the Urban Land Institute and PricewaterhouseCoopers, the Millennial demographic (20-to-34-year-olds) in Washington, DC, comprises almost 23 percent of the population and is projected to grow by 6.5 percent by 2019. The resulting demand for affordable housing, combined with an already low inventory and a rebounding housing market, will put home sellers in a strong position. With a median sale price of $358,485, owners selling their homes without the services of a real estate agent will benefit, saving the agent's 6 percent commission, an average of $21,509 in the Washington, DC, market.
The most important features driving a purchase for home buyers in Washington, DC, and the neighboring market of Baltimore are home amenities and floor plans, according to a 2014 Survey of Home Buyers and Sellers conducted on behalf of ForSaleByOwner.com. A garage or carport tops home buyers' lists of important features in the area. Central air is next on the list, followed by the house being in move-in condition, a renovated or new kitchen and an outdoor space. The most common deal breakers include a lack of central air, no garage or carport, and a floor plan that is not single-story.
Popular Washington, DC, neighborhoods include DuPont Circle and Adams Morgan, pedestrian-friendly areas to the northwest of the capital with traditional brownstones and some of the city's best restaurants. Georgetown, founded in 1751, is the city's oldest neighborhood and features residential architecture ranging from historic brick and frame row houses to multimillion dollar mansions.
Across the river in Virginia, desirable residential neighborhoods include Arlington and Alexandria, where attractions range from Arlington's beautifully preserved historic Old Town to the towns' unique shops, boutiques and restaurants. McLean, Virginia, boasted the highest-priced home sales for the area in 2013, including the late Sen. Edward M. Kennedy's home.
Portions of Maryland, just over the border, offer high-end neighborhoods, such as Chevy Chase and Potomac, where four of the five most expensive homes in Maryland were sold last year. Attractive Baltimore neighborhoods include the Inner Harbor, an area with apartments and condominiums popular with young professionals; Mount Vernon, an artistic community with carriage houses and Victorian row homes; and upscale communities, such as Ellicott City, Towson and Green Spring Valley.
Up next: Houston, where a booming economy and hot real estate market have propelled the city to second place on the “Markets to Watch” list for 2014.
See what other cities made our Top Real Estate Markets list.