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Houses in D.C. area selling fast, often above list price

- The Washington Times - Wednesday, May 1, 2013

In Washington, Marshall Park isn't surprised anymore when he sees a home sell on the first day it is listed.

It happens. he says, on a regular basis at Redfin.com, an online real estate brokerage where he works. Buyers are moving more quickly than ever before to get the homes they want, because they know if they drag their feet, they could miss out.

"We've seen homes that sell within hours," Mr. Park said, pointing to a recent Loudoun County, Va., property that sold only four hours after it hit the market. "Sometimes the offer is just too perfect to pass up, so they're ready to sell it right away."

Mr. Park and others in Washington real estate say the city, along with a handful of other hot markets around the country, is leading a national rebound in home prices.

According to Standard & Poor's Case-Shiller index, homes sold for 9.3 percent more this past February than they did during the same month in 2012 — the largest year-over-year increase in nearly seven years. That followed an 8.1 percent gain in January from the previous year.

Increased demand from buyers and a low inventory of available properties have combined to drive up home prices around the country.

That's what happened in Washington recently, when one Capitol Hill home listed on Redfin sold for more than double the asking price.

The townhouse on the 800 block of Fourth Street Northeast kicked off a bidding war as soon as it was listed. Two weeks later, the home had received 168 offers. It sold for $760,951, even though it was listed for only $337,000.

Tom Lewis, who also works at Redfin, said home prices are escalating to keep up with demand.

"It's just become commonplace," he said.

The average home for sale used to receive one to three offers, he said, but that's "pretty low" these days.

"It's not unlikely to see up to 10 or 15 offers," he said.

Home are also selling more quickly.

Redfin began tracking what it calls "flash sales," or homes that sell within 24 hours of hitting the market, last fall. From October to February, the website reported 87 flash sales in the Washington area and 97 in Baltimore. Both are among the top 15 cities.

Phoenix led the way in flash sales with 540 during that time. Chicago was second with 261, followed by Houston, Dallas and Austin, Texas, to round out the top five.

"Some people take more time to decide on a new pair of shoes," Redfin joked in a blog post about the trend.

In the hottest neighborhoods, houses are moving so fast that buyers are scrambling to keep up.

"They're going out there, presenting what they think is a really great offer," Mr. Lewis said. "But their offer still doesn't get accepted, because another offer ends up being much higher, or another buyer can pay cash, which is more attractive to sellers.

"We've seen buyers that are missing out on not just one or two, but three, four, five, even six homes," Mr. Lewis said. "It gets exhausting and really beats you up as a buyer."

Mr. Park said low-ball bidders are out of luck in a market where sellers are often getting more than asking price.

"It takes a few offers before buyers realize, 'Wow, we can't win with a full-price offer,'" he said.

But Greg McBride, senior financial analyst at Bankrate.com., predicted the market will level out.

"It would be foolish for people to expect that this is going to hold for any length of time," Mr. McBride said. "We will see a much more modest pace of appreciation going forward."

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