Written by Tim Savoy
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.
This article first appeared in the Washington Blade. Tim Savoy is a real estate agent with Coldwell Banker Residential Brokerage, Dupont Circle. Reach him at 202-400-0534 or firstname.lastname@example.org.