- The Washington Times - Friday, January 11, 2002

The Washington area's real estate market still favors sellers, industry observers say, despite any reports that the market is softening. Yet the resale market is, perhaps, subdued compared to last summer's wilder times, say economists and real estate agents, who still are selling houses as quickly as they become available.

"I'm still getting 10, 12 even 14 offers on some houses," says Phyllis Alexander of Pardoe Real Estate in Georgetown.

The difference, agents say, is the price.

"Sellers who are still putting their houses on the market priced like they were six months ago [when] there was all this crazy bidding are not being realistic," says Gerald Whoolery, an agent with Realty Executives in Beltsville.

Although low housing inventory has insulated the real estate market somewhat, sellers can no longer shoot for the moon as they once could. Mr. Whoolery gives as an example several homes in Montgomery County's Manor Lake that last August were getting multiple contracts for $360,000 and more. Today, he says, the same houses likely would sell quickly for $350,000.

Not only that, but sellers frequently are having to sweeten the deal a bit more with lowered prices, home improvements and other inducements.

"You might get your asking price at $360,000, but you might have to offer some closing help," Mr. Whoolery says, adding that sellers are again having to pay 1 percent to 3 percent of closing costs. "It's still a seller's market. It's just more competitive now," he says.

National statistics reflect local examples.

In December, the National Association of Realtors reported that despite sluggish fall sales, 2001 set records for existing home sales, although final figures for the area aren't available. David Lereah, the association's chief economist, projects that existing home sales will continue to be robust through 2002.

"The events of September 11 dampened housing sales, but it's amazing how remarkably resilient the housing market is," Mr. Lereah says. "Last year was probably the second-best housing market we've seen. Prices have come down a little bit, but not as much as expected."

Nationally, home prices were up almost 8 percent in 2001, Mr. Lereah says. They were even higher in the Washington area, where the Greater Capital Area Association of Realtors reported an 11 percent increase.

Low inventory combined with historically low mortgage interest rates have made for solid home price appreciation, the economist says.

"The supply of available houses is relatively lean," Mr. Lereah says. "Demand is still there, though. It's a good time to put your house on the market."

Agents agree but add that careful pricing is necessary because buyers are sticking to list price and not overbidding the way they did last year.

"Last summer, we would try any price, and people would buy it because they were afraid they wouldn't be able to find anything later," Mrs. Alexander says. "Now buyers know there will be other opportunities."

That's why Mrs. Alexander advises sellers to price their houses based on research and comparables and not try to one-up the neighbors.

"Things that are staying on the market are overpriced because buyers are a little more resistant. You have to anticipate that," Mrs. Alexander says.

Just last month, her selling strategy paid off on a Bethesda house that she said "showed beautifully" and listed at $349,500 based on comparables in the neighborhood. Sure enough, within days of listing, the owners had four offers in hand and accepted one well over the asking price.

"We talked about that as part of our strategy," Mrs. Alexander says. "A reasonable price is going to draw a larger pool of buyers and, when it comes down to it, buyers are willing to stretch $10,000 or so for a property in good condition because at these low mortgage rates, it doesn't make that much of a difference on the payment."

It has been difficult for sellers to accept the change in the market, especially when neighbors have recently sold houses for exorbitant amounts, says Dale Mattison, president of the Greater Capital Area Association of Realtors and an agent with Long & Foster Real Estate in Chevy Chase.

"People by nature tend to feel that their property is better than the last one," Mr. Mattison says, "and when people were getting 10 to 20 percent overbids on a regular basis last spring, it throws everyone off."

Spring, of course, will be the real test.

December, with the holidays, and January, with its short, gray days, usually are slow months for real estate. Add to that the gradual rise of interest rates from early November's tantalizing 6.45 percent. Mr. Whoolery says a slowdown was expected.

The easing in home prices however slight has been a welcome adjustment for some buyers who were pushed out of last summer's aggressive market.

Last week, Mr. Whoolery contacted a couple of clients who had made offers on several properties in July only to have them rejected for bigger, better offers.

"These people kept getting their hopes up. Finally, they said, 'This is too crazy. We'll wait until the first of the year,'" Mr. Whoolery recalls. "Now, both are very eager to look again."

So are other buyers who hoped that the seller's market eventually would ease up a bit and let them get their foot in the door.

"Sellers who are overly aggressive need to harness their excitement a bit," Mr. Mattison says. "We're lucky we're in a region that is somewhat isolated from highs and lows of economic pressure. Pretty much, if it's a clean, well-priced property, without regard to the neighborhood, it will sell immediately with multiples."

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