- The Washington Times - Thursday, January 13, 2005

The year 2004 may be remembered as the year of the most competitive, most active real estate market in Washington history. When we add the figures for December, total existing-home sales for last year should exceed 130,000. Sales last year were nearly three times higher than in 1995.

I said 2004 “may” be remembered as the most active market. Its place in history will depend on the 2005 market.

Could 2005 be even busier, with buyers competing more fiercely than they did last year? I just don’t know, and I’m no longer making many predictions, considering how hard this market has been to predict in recent years.

I do know a few things.

One, the metropolitan area will continue to grow outward. With some of the strongest job growth in the nation and little space for new homes inside the Beltway, it is inevitable that the scale of the Washington metropolitan area will expand.

Loudoun and Prince William counties are evidence of this. These counties saw the largest growth in existing-home sales. And the reason more existing homes are selling there today is so many new homes have been built there in the past decade.

Second, home prices will not fall — and will likely rise by a double-digit percentage once again. It’s hard to imagine home prices getting any higher. But the level of competition among buyers was unbelievable at the close of 2004. And it is competition that drives prices upward. As buyers battle one another for properties this year, prices will go up.

Third, buyers will need to be increasingly careful. Prices are high today, and many buyers are choosing adjustable-rate mortgages. The low interest rates help many buyers afford a home, although it is often tight.

Buyers this year need to answer these questions: Do you have a plan for the day rates rise?

Will your income increase at the same rate as your payment?

Do you know how you will manage an increase of, say, $500 a month in your mortgage payment?

Chris Sicks

Reach Chris Sicks by e-mail ([email protected]).

The statistics in this story reflect a metropolitan 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.

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