Making predictions about the Washington-area housing market isn’t easy. For several years, market watchers, including me, kept predicting that the market was just about to cool off.
We were wrong about 2003 and 2004; 2005 was the year when the market finally did cool down, with a sudden drop in sales and a sharp rise in supply.
So, how will 2006 look? Do I dare to make any predictions?
I do, but I also will call in an expert to back me up.
Next year won’t be the on-fire seller’s market of recent years, but it also won’t be the cool, leisurely buyer’s market of mid-1990s.
What we’ll have is something in between.
“It’s what I call a ‘normal market,’ ” says David Rathgeber, principal broker of Your Friend in Real Estate in Potomac Falls, Va. “Most of us don’t even know what a normal market looks like because we went through it so quickly last time.”
Mr. Rathgeber is referring to 1998-99, when the market quickly shifted gears from a buyer’s market to a seller’s market. Sales climbed and inventory fell, and that combination began a rise in home prices that didn’t peak until this spring.
“Next year’s normal market will mean that buyers will be able to take a little time to think about their purchase,” Mr. Rathgeber says. “Many will find they don’t have to fight off other buyers, and so they will be a lot happier.”
“Sellers will find they can’t just stick any old price on a home and sell it in two days. They will have to carefully analyze their home’s value before listing it. After they’ve done that, they will be able to sell their property in a reasonable amount of time for a decent price.”
Next year’s sellers should be as happy as the buyers, although some may grumble. Homes won’t sell as quickly in 2006 as they did this year, but they will sell. Profits will be large, too, because of the incredible rise in home values during the past several years.
Real estate agents also will be happy with next year’s normal market.
In a frantic seller’s market, agents have to baby-sit frustrated buyers who make offer after offer, only to be outbid by other buyers.
The opposite is true in a plodding buyer’s market such as we had from 1991 to 1997. Back then, sellers were the ones who needed hand-holding as they waited month after month, hoping someone would come along and even make an offer on their home.
Next year should be a much healthier market. Home values won’t go through the roof, which will disappoint anyone who bought recently.
Remember, however, that we only experienced that kind of appreciation because the market was so imbalanced.
Inevitably, balance had to be restored, and that’s what I believe we’ll see in 2006. A little more balance, a little normalcy. Won’t that be refreshing?
Contact Chris Sicks by e-mail (email@example.com).
The statistics in this story reflect a metro area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.