- The Washington Times - Monday, July 13, 2009

Louisa Queirolo can describe the experience of selling her luxury home in one word: nightmare.

Her four-bedroom brick Colonial in the coveted 22066 ZIP code area of Great Falls has been on the market twice since December 2007. During that time, she has dropped the list price from $914,000 to $748,000 — as low as she’ll go, she insists.

She said many buyers want a home in her neighborhood and think her house is “beautiful,” but they want it for the same price as a home without the amenities hers has, such as a custom library with a stained-glass window and a backyard pond with waterfalls.

“They want a house like mine for the price of all those that don’t have a basement, don’t have a pool … but guess what? They’re not getting it,” she said.

Mrs. Queirolo’s complaint is common in the upscale suburbs surrounding the District, where trophy homes can sit on the market for years, unsold and often vacant.

While sales of low- and moderately priced homes have begun to stabilize after months in the doldrums, the market for larger homes has not shown signs of a recovery. In Fairfax County, where Mrs. Queirolo’s house sits ignored, sales of homes priced between $800,000 and $900,000 have fallen 33 percent since May 2008, while sales of million-dollar homes have fallen 26 percent.

Sales of homes listed for more than $1 million fell 40 percent in Alexandria during the same period. For homes priced between $800,000 and $900,000, sales there plummeted 88 percent, according to the Northern Virginia Association of Realtors.

In Potomac, sales of homes between $1 million and $2.5 million fell 39 percent in May from the same month the year before, according to the Maryland Association of Realtors.

Real estate agents said it is taking a lot longer to sell big, pricey houses because it has become difficult or impossible to secure large loans since the housing bubble burst in the summer of 2006.

“The more expensive the home, the longer it takes to sell, and in this market, even large homes sell slowly,” said Lynda O’Dea, a real estate agent in Maryland. “But even for recent years, these are extreme numbers.”

Potomac resident Neil Shahi said he wants to move to Texas because his job requires him to travel there several times a month. But he can’t unload his mansion. Mr. Shahi said his home has been on the market for two months, and he already has had to lower the price to $1.25 million — $50,000 less than his original asking price. Although more than two dozen prospective buyers have visited his property, he said, in the end they decide they just can’t afford it.

“People have more difficulty getting loans because the lending requirements are more strict … and also a lot of people are not sure even if they have a job or how long it will last,” Mr. Shahi said.

Mr. Shahi said the most difficult thing about his home not selling is that it keeps him away from his wife and two children.

“It does put a strain on the family because you are traveling all the time,” he said. “You’re gone, and the whole family is here, and you want to move on and get on with your life, but the economy is what it is.”

Ms. O’Dea said suburbs such as Potomac, where she maintains an office, are languishing because sellers still expect too high a price and buyers can’t sell the homes they already own.

“We need more home buyers on the market,” she said. “I know several buyers, looking for homes, who want to sell theirs but can’t.”

“More homes will sell as the prices drop farther,” said Lorraine Arora, branch vice president for Coldwell Banker in Arlington. “If there’s no traffic on a home in the first 15 days, we drop the price. [An agent] is not doing the seller a service if the home won’t sell.”

Even in the grips of an intense recession, counties surrounding the District retain some of the highest household incomes in the United States, according to Census Bureau data. That ought to give the real estate market a lift, but buyers are refusing to budge, and sellers are often stuck holding onto vacant properties for months.

In Fairfax County, the average time on the market for a single-family home was 82 days in May, a welcome drop from its peak of 123 in February. The patience of other sellers in the Washington area is being similarly tested: 89 days on the market in Falls Church, 103 in Arlington. Average days on market for homes in Potomac rose from 74 to 105 in the past year, according to the Maryland Association of Realtors.

Jim Diffley, managing director of regional services at IHS Global Insight, said sellers cannot expect conditions to improve substantially until the real estate market has had a chance to stabilize, which he thinks will take another year.

“Sales are at a historically low level, and they’re going to stay that way right now,” Mr. Diffley said. “There is pressure for a downward price, and it takes time to work that off and see some return to normalcy.”

Mr. Diffley added that sellers should not compare days on the market now to what they were in 2006.

“That was the extreme,” he said. “We’re not going to go back to putting a house on the market and getting four offers above the asking price the first weekend it is on the market. Also, a large house would not be expected to sell historically, even in the ‘90s and ‘80s, before six months.”

Aasef Shafik admits that he got involved in real estate at the wrong time. Years ago, he spent $300,000 renovating an Arlington home — only to see the market evaporate when the improvements were done.

“I bought it to make money,” he said. “I had it with a Realtor for almost a year, and he couldn’t sell it, either.”

The house has been for sale for three years, originally with a price tag of more than $1 million. Now it’s down to $885,000. Mr. Shafik said he has resorted to renting out the home to make some money while keeping it on the market.

Mr. Diffley said that although the Washington-area housing market is better than in many other areas, it still has its problems — especially for those hoping to sell larger homes.

“The big problem with the larger homes is that mortgage credit is harder for them now,” he said. “Prices in the Washington area haven’t fallen as much as they have, say, in California, but that part of the market has not recovered yet by any stretch of the imagination.”

“Confidence is always huge,” Ms. O’Dea said. “It’s fear and financial turmoil that got us into this complex situation, and it will take us a while to get us out.”

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