The U.S. housing market is plagued by falling prices and slow sales. But in the nation's capital, open houses frequently end with closed deals.
The Washington metropolitan area is the only major U.S. housing market where prices increased on an annual basis in the first quarter, according to a 20-city home-price index released Tuesday. The region was helped by relatively stable employment, fewer foreclosures and an abundant supply of house hunters.
Other surveys indicate sales in the area are approaching boom-time levels. In April, 5,170 home-sale contracts were signed in the Washington region, the second highest number since 2006. A survey showed April's sales volume was up from the same month a year earlier, a surprising milestone because of last year's boost from a federal homebuyer tax credit.
We're having a tremendous spring said a broker. Her survey tracks the District of Columbia, Fairfax County, Arlington and Alexandria, Va., and Montgomery County, Md.
While the area remains a buyer's market, anecdotal evidence suggests the tables are slowly turning, especially for properties in the city and inner suburbs.
One couple had to make five offers before they finally got a house under contract in the Burke area of Fairfax County, Va. One was a multiple-offer situation. The one they took had an escalation clause. They didn't even think people were doing those anymore. Such clauses raise a buyer's offer automatically in case of higher competing offers.
Some of the frenzy can be chalked up to the couples must-haves. Married for a year and a half, the couple had been renting and wanted a house with space to grow a family, within an hour's commute of downtown, in a good school district—all for under $500,000. In other words, they wanted what many young families in the area want.
The nation's capital has often been called a recession-proof town. But the latest economic downturn didn't leave it unscathed. Unemployment peaked in January 2010 at 6.9%. The Labor Department reported Wednesday that unemployment decreased in April to 5.4%. The area also has had its share of foreclosures, notably in Maryland's Prince George's County and Virginia's Prince William County.
Area home prices had ticked downward for seven months in a row, but that streak was snapped with Tuesday's data showing prices rose 1.1% in March from the previous month. The declines, however, weren't as steep as those affecting much of the country.
The city and inner suburbs have been the first to rebound, with prices in some areas at or above peak levels.
The farther out you go, the slower the uptick. But the prices are better in Woodbridge, Va. With gas prices, buyers are weighing those options though. The District of Columbia and close-in suburbs haven't experienced as high a rate of foreclosures as other areas, which has allowed pricing to remain more stable. In April, one in every 985 homes in the Washington metro area was in some stage of foreclosure, compared with one in every 593 nationally.
Perhaps more importantly, economists say, the region continues to both attract and keep those house hunters still missing in many areas: first-time, move-up and downsizing buyers, as opposed to luxury or investment buyers.