The Washington D.C. real estate market has been anemic for the last few years. Sales have fallen in seven of the eight months since the government shutdown and probably will remain stagnant this year. However, prominent financial professionals seem confident that the market will grow in the next couple of years.
Many investors have started purchasing houses and commercial properties throughout the D.C. area. This could be sign that is a good idea for middle class families to start purchasing homes in D.C.
Real Estate Investors Purchase More Properties
Ron Paul, the CEO of EagleBank, has said that real estate loans have increased significantly in recent months. Paul said that most lending applications have been filed by private investors.
Paul is confident that investors will continue to purchase properties throughout D.C. in the months to come. He said that the job market has improved significantly in recent months. Paul believes that the local economy will continue to grow in the months to come, which will drive the D.C. housing market.
Paul’s opinion of the Washington D.C. real estate market is corroborated by new data from Zillow and other real estate listing services. While home prices in the D.C. area are about twice as high as the national average, middle class families aren’t priced out of the market. Lower priced houses account for about 25% of the inventory on the market. Few middle class families can afford to purchase properties in New York, Boston and most other metropolitan areas, so D.C. can be a good alternative.
Being a good alternative to those other major cities, the housing market is expected to thrive as more middle class families relocate to D.C. Savvy investors are acquiring properties with the expectation values will appreciate in the near future.
Real Estate Professionals Remain Optimistic
The new trend is encouraging to real estate professionals throughout D.C. and Virginia. Many of the properties in the region are historic homes or large complexes. New homeowners face a learning curve with these properties. They are probably more likely to rely on contractors or handymen for assistance, which is great news for the local remodeling market.
Real estate agents are optimistic that the market will finally begin to grow once again. However, many were discouraged by a new report from RealEstate Business Intelligence showing that sales dropped 4.5% last month. The market has been understandably tepid since the government shutdown. However, there are signs that things are going to improve soon.
Most of the decline was driven by government layoffs, which makes sense. However, the private security is starting to pick up the slack. Private job growth has been unusually strong in the area, which indicates that federal austerity measures have only been a temporary bane for the region’s housing market.
The sluggish housing market has been discouraging for real estate professionals in recent years. However, leading indicators tell them that the market may turn around in the next year or so. Savvy consumers realize they may have a small window of opportunity to take advantage of depressed prices of foreclosed properties. Prices of distressed properties have been unusually low, but they will likely increase as more institutional investors acquire them.
The other good news for current D.C. area homeowners is that now is a great time to do work on their older homes. Return on investment for many remodeling projects is expected to be much higher as home values are expected to rise. Also, those new to the area can rely on expert contractors in the D.C. metro that are familiar with the local building codes and have historical renovation expertise to make sure their new homes are properly maintained.