"A Tale of Five Cities"-Washington, DC
Monday, May 05, 2008SUZANNE PRATT: From east to west and north to south, there's no question the U.S. housing market is a mess. This week we'll bring you some of the nation's most compelling real estate stories, with a special series we call "A Tale of Five Cities." We begin tonight in the Washington, DC metro area, where the housing market varies greatly by county. As Stephanie Dhue reports, the key is location, location, location.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Real estate agents Vickie and Charlie Carroll have been selling houses in northern Virginia for nearly 20 years. In the last year, their business has focused on this:
VICKIE CARROLL, AVERY HESS REALTORS: They left the washer and dryer. That's nice.
DHUE: ...evaluating and preparing foreclosed properties for sale. Vicky Carroll says the large number of bank-owned properties has taken the move-up buyer out of the market.
CARROLL: Because most of the houses in the basic, the lower price ranges, are going to market as foreclosures, the seller of that property which is now a bank is not a buyer in a market that is slightly higher.
DHUE: While sales throughout the DC metro area are down, location plays a key role in prices. In the areas furthest out, like Prince William County, prices are almost 27 percent lower than a year ago. In Loudoun, prices are about 20 percent lower. But the picture changes the closer you get to DC. In Fairfax County, prices fell about 12 percent. Inside the beltway, prices are mixed, with Arlington up 0.6 percent and prices up 8 percent in northwest DC. John McClain of the Center for Regional Analysis at George Mason University says the region overall was due for a price correction.
JOHN MCCLAIN, CENTER FOR REGIONAL ANALYSIS, GEORGE MASON UNIV.: Growth in prices had way outstripped the growth in incomes, so the affordability of homes began to fall a lot, in terms of how many houses with a certain income could you afford and so that eventually had to take its toll. There had to be a price adjustment.
DHUE: While prices in DC's most sought after neighborhoods are stable or rising, what's depressing prices in the outer suburbs are a combination of higher gas prices and distressed properties. Sellers are having to compete with reduced prices on foreclosures.
CARROLL: A seller who has a heavy mortgage is going to have a tough time competing with a bank who wants to reduce their inventory in a fairly short order. So this will be aggressively priced, but the banks do want fair market value.
DHUE: First-time homebuyers Randy and Lisa Anders took advantage of falling prices here in Prince William County, which is about 40 miles from DC. The couple was able to negotiate a lower price from a seller who was relocating.
LISA ANDERS, HOME BUYER: We looked at a lot of foreclosures. The foreclosures were - they were a really good value, but a lot of work to put into them and so we had to look at quite a few houses until we found this one.
RANDY ANDERS, HOME BUYER: I think we got a pretty good deal at the time. If it goes down, it goes down, you can never tell. It may shoot way up and then we'll be counting our lucky stars we did what we did.
DHUE: Economists predict it will be a year before the DC metro area returns to a normal housing market. For further out and harder-hit counties like here in Prince William, it's likely to take an additional six months for the market to stabilize. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Gainesville, Virginia.
YASTINE: Tomorrow, "A Tale of Five Cities" continues with a look at New York City's real estate market.
