- The Washington Times - Friday, July 14, 2000

The sizzling hot real estate market that has dominated the Washington area for the past year is showing signs of cooling, area real estate experts say.

"The market is going from a superheated one to a very strong one," says Walter Molony, spokesman for the National Association of Realtors.

What does this mean to you the potential home buyer or seller? Is the market starting to come into balance?

In the region's hottest market Arlington Long & Foster Realtor Betsy Twig says, "We did have a property with 11 contracts and $40,000 over list recently." The four-bedroom, two-bath Cape Cod listed for $249,000 sold for around $289,000, but this scenario is becoming the exception, she says.

Ms. Twig says houses are staying on the market longer and not selling the first day. She says inventory is increasing.

"There were people who did not have the stomach for the bidding wars … and we are starting to see those buyers come back into the market. They can now deal on a level playing field," she says.

While those buyers waited out the market, the unfortunate result is prices are now higher. Yet, Ms. Twig says some nice houses are sitting on the market because they are overpriced.

"We are starting to see price reductions," she says.

The hottest houses in Arlington are in the $250,000 to $350,000 price range where most of the people are looking, she says.

"For example, in North Arlington we have 82 single-family houses on the market," Ms. Twig says. "Fourteen of those have been on the market for less than a week and the rest have been on the market for more than a week. Of the 82 houses, 19 are in the $250,000 to $350,000 range."

She says a property overpriced by about $60,000 has been on the market for 15 days, a long time for the neighborhood. And, she says, the price on another house has been reduced several times.

"That would have been unheard of a month ago," Ms. Twig says. "People got over-enthusiastic about pricing and those houses are still on the market. A house that is in a good neighborhood and priced fairly will still sell in about a week."

One example of the market coming into balance was given by Bob Herring, a Realtor with Weichert Realtors in North Arlington. He says the price of a house on Lorcom Lane was dropped by $20,000 after the house had been on the market for a month. Four offers were made within four hours of the decrease.

On the other hand, Mr. Herring says, a listing in Lyon Village he thought was priced too high had multiple offers and sold for more than the asking price. He says he is still seeing multiple offers in the right neighborhoods, which is largely dependent on the schools.

"If it's priced right and is a nice house, it should last about four days. If it's over a week, we figure it's overpriced," he says.

But he does say pricing a house is getting more difficult in North Arlington. "A Broyhill rambler was priced at $309,000 and sold for approximately $360,000 and had 15 offers," he says.

Mr. Herring says more hyperactivity is evident with homes in the $300,000 to $400,000 price range because that is where the young buyers are looking. They also are looking in the District where condominium sales cannot keep up with the demand.

"The market has cooled, but condos are still hot and fly off the shelf," says Glen Sutcliffe, a Realtor in the Uptown office of Coldwell Banker Stevens.

"I see a leveling of the playing field. Buyers are taking more time and sellers are realizing they should price right to begin with," he says. Mr. Sutcliffe says multiple contracts and bidding wars have slowed down in the District.

"It's good news for buyers, but not bad news for sellers," he says. "Sellers will still get a good price for their house; it's just that they can't afford to price higher than what it will sell for. They can't get away with that now."

Pricing is always an issue, but the neighborhood plays a big part in how fast a house sells. A Georgetown or Dupont Circle property will sell within a week if it is correctly priced, he says. To illustrate the difference a year makes, he tells of a house in Dupont Circle that sold for $350,000 after 60 days. "This year, similar houses are under contract for $820,000 and $940,000," Mr. Sutcliffe says.

But do not get discouraged. Bargains are still available in the city in the form of fixer-uppers. A three-story Victorian in Columbia Heights under contract for $185,000 sold in two weeks, he says. These houses usually take longer to sell about 30 days to 60 days but are still the best buys, he says.

"The most interesting thing is that a high percentage of buyers simply do not want to do any work," Mr. Sutcliffe says. "I had one buyer, a lawyer-lobbyist, who asked me to tell the seller to leave the picture hooks in. They are just too busy."

Young buyers from the area are interested in the District, Mr. Sutcliffe says. They are first-time buyers in their early 30s who are buying houses from $250,000 to as high as $600,000.

"They are finally starting to realize the advantage of the reverse commute. People are starting to appreciate quality of life as opposed to quality of the highway," he says, adding it's almost like a status symbol to own in the District.

He says his buyers are well-informed and aware of the benefits of moving into the city, including the $5,000 federal tax credit.

Young home buyers know about the plunge home prices took in the late 1980s and are afraid of buying at the top of the market, Mr. Sutcliffe says.

That fear has led some young buyers to wait out this market, says Jane Fairweather of Fairweather Collection at Coldwell Banker Realty Pros in Bethesda.

"It's a hard market to buy in. It's frightened a lot of people and they have waited. Now is a good time for them to come back into the market. You can actually make offers now and there is negotiating going on. That was unheard of a month ago," she says.

Ms. Fairweather explains that "it wasn't just bidding on price. It was taking out the home inspection contingency, the financing contingency and the appraisal."

Ms. Fairweather says houses that were priced at the top of the range used to get multiple offers and now it's the houses at the bottom of the range that are getting more offers.

"I have houses that I am saying to [sellers], 'If you are trying to get the big number, it's going to be 30 days.' "

However, she says, "If you are entry-level [sellers] in the lower $300,000s, that's probably about two to three weeks."

The market is still hot in close-in Bethesda neighborhoods, Ms. Fairweather says. Houses sell quickly and multiple contracts are still common in the entry-level price range.

The good news is that sellers are willing to adjust prices and Ms. Fairweather says she is doing price reductions more now than two months ago. "It's more normal. Buyers don't feel as stressed out and have more time to make decisions. It's better for everybody."

While city living is great, families with children tend to buy farther out where they can get more house for their money. In Howard County, for example, business is brisk for Georgiana Tyler, associate broker with O'Conor Piper & Flynn ERA in Columbia and Roland Park.

"My sense is that I am gasping for air; I am so busy," says Ms. Tyler.

But she says the market is coming into balance: "Equilibrium means a house comes on the market and is fairly priced, in decent condition and it stays on the market for a week."

That certainly is a welcome sign for buyers who have grown weary of multiple contracts and bidding wars.

"About eight months ago, buyers got real smart. I have seen buyers in a multiple contract situation say, 'No, I am not going to do it withdraw our offer,' " Ms. Tyler says.

That's not to say multiple contracts are a thing of the past, however.

"In areas where houses are in demand, they sell within a matter of days and usually with multiple contracts," she says. And Ms. Tyler says houses in the $300,000 to $400,000 price range are the hottest and it's nearly impossible to find these in Howard County.

Ms. Tyler says she is seeing fewer situations where a house is listed on Monday, shown on Wednesday and the seller looks at contracts on Thursday.

"Occasionally, we run into the seller who wants to take advantage of the market," she says. "They are sitting with six offers on Thursday and have another appointment on Friday." She says that is now the exception, however.

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