- The Washington Times - Thursday, November 10, 2005

Slower home sales in the Washington area have affected not only the major players in real estate transactions such as brokerages and bankers. Auxiliary companies directly influenced by the housing market — title companies, inspectors, rug installers and movers — also say they have noticed slack sales since late summer.

Bill Thompson of All Star Movers in Fairfax says he has experienced a significant drop in calls and requests for storage.

“Up until early August, things were flying,” he says. “Now there has been a quick turnaround in the other direction. It’s starting to reverse. People don’t have to move out as quickly.”

Mr. Thompson says he believes the number of customers has declined recently because of housing prices in the area. Would-be buyers are opting to stay where they are.

“It’s getting really hard for someone to live and work in Fairfax County,” he says.

At JK Moving and Storage, a large moving company serving Virginia, Maryland and the District, business was growing at an annual rate of 40 percent last year.

During September, though, business dropped 20 percent.

Despite the dip, company President Chuck Kuhn says the firm is handling the transition well, relying on business from the government, defense and international sectors.

Mr. Kuhn says he hopes the housing market will soon correct itself, observing that volume seems to be moving back up as of October.

“Things are looking very positive,” he says. “We saw ‘Harry Homeowner’ drop off, but other markets are strong.”

Title companies have also witnessed a dwindling number of clients.

“Out of nowhere, there was a sudden pause, which produced a slow September for a lot of people,” says Steve Sushner, president of District Title in the District.

The one exception to the cooling in business, he says, is studio or one-bedroom condos or town homes.

“They are still as hot as usual,” he says.

Mr. Sushner says that it is now taking six to eight weeks to sell single-family homes and that this sluggish schedule has a cascading effect on other companies, like his.

Mr. Sushner says he believes homes are sitting longer because homeowners are not willing to pay current prices to move into larger homes and commit to a higher mortgage payment.

“People are afraid to move up,” he says.

However, Mr. Sushner says he remains optimistic, pointing to the level of business over the last three years, which he says helped him to develop a strong base of clients referred by agents and brokers.

This foundation, created when the market was booming, helped his company sustain the recent fluctuations.

As summer has ended, he says, business is starting to rachet back up.

“Looking at the contracts coming in for October, and November, we see things coming in at a normal pace again,” he says.

The difference with recent contracts, he says, is that buyers are no longer waiving inspections and other contingencies and that there are no escalation clauses — conditions that were typical during the hottest months of the buying frenzy.

Home inspectors have actually benefited from the sputtering market. In the last few years, inspectors saw their trade take a plunge. Buyers were opting to waive inspections and other contingencies in order to win contracts on homes, in the midst of fierce competition and bidding wars.

“We had been losing when the market was red hot,” says John Vaughn, owner of At Home Inspections Inc., based in Maryland, and president of the mid-Atlantic chapter of the American Society of Home Inspectors.

“In the last three years, some multi-inspector shops have probably been letting people go,” he says.

Now that the trend has changed, Mr. Vaughn says things are looking up for his field, as the need for inspections is rapidly accelerating.

In the District, for example, Mr. Vaughn says he is conducting pre-contract consultations with buyers. Many homeowners in Maryland and Northern Virginia are also realizing the need for walk-throughs before making an offer on a property.

Mr. Vaughn, with 25 years in the industry, says cycles in the market are normal and it’s difficult to forecast the future.

“It depends on different factors,” he says. “We may see a deceleration in pricing and home sales, but I don’t think we’ll be flatlining.”

Other industries experiencing faltering sales are not as hopeful, as they continue to see fewer customers.

Frank Sharafnia, owner of City Carpet in the District, says he no longer has many walk-ins looking for home carpeting.

Usually, he says, the most noticeable lull in business comes during January, but this year, things have slowed since the end of the summer.

“This time of year, we should be all right,” he says. “We should have walk-ins. It was good in August, but then in September, it suddenly stopped. It was unbelievably slow.”

His company can still count on strong business with apartment building owners in the District, he says, and that is has kept City Carpet going.

Mr. Sharafnia says he believes the price of homes has risen to such a point that single-family housing is out of reach for many, equating to flagging sales for his company.

To illustrate his point, he points to a formerly regular City Carpet customer who would buy three or four houses in the District, install new carpet and other amenities in the homes, and then sell them quickly.

“He’s not doing that now. I haven’t heard from him,” Mr. Sharafnia says. “For me, this is unacceptable. Hopefully, they will find a solution.”

What has caused the real estate slowdown? Simple supply and demand, real estate observers say. Escalating prices driven by pent-up demand led many to put their homes on the market at top dollar during the hot selling season that normally begins in early spring in the Washington market.

But demand for housing is always seasonal and tends to drop off in the Washington area as the weather turns cooler. After churning at a record pace for more than three years, demand has waned even more than the usual seasonal dip. Some in the field say it has dropped more suddenly than expected, leaving more homes available at prices that the remaining buyers are unwilling to pay. This has led to a surplus of houses, making sellers anxious as their homes linger longer on the market.

“There is a definite slowdown,” says Tracy Pless of Long & Foster Real Estate in Reston, chairman of the board of the Northern Virginia Association of Realtors. “There is so much inventory. Everyone wants to sell, but then everyone wants to wait to buy.”

The slowdown has frustrated sellers. At times, they have responded by firing their agents for not making the sale quickly enough. Ms. Pless says she sees a number of properties withdrawn or expired on the Multiple Listing Service every day.

“They think we’re not doing a proper job, when actually, we work as hard as ever,” Ms. Pless says. “The problem is the listing price.”

Ms. Pless says many sellers still want to offer their homes at unrealistically high prices, refusing to believe that the market has turned.

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