- The Washington Times - Friday, June 19, 2009

Washington-area home-sellers enjoyed another good month in May. Sales of existing homes were up 21 percent over May 2008, and it was the best May we’ve seen since 2005.

Sales were much lower than they were in 2005. However, that was a different market, driven in part by irresponsible lending and eager investors. Those factors created artificial demand that drove home sales higher than they would have been otherwise.

Since 2005, the housing market has been painful to watch, as you know. However, things are looking up for the first time in a long while. Inventory is down and sales are up. Competition among buyers is increasing, and that is important because it is the force that will drive a rebound in home prices.

To download a PDF of the chart, click here.

I have friends who are trying to buy a home in Northern Virginia while mortgage-interest rates are still low. Every time they find a home they like, three or four other offers come in for the same property.

Multiple offers from buyers have been an endangered species for the past four years. Their return means that buyers are motivated to buy and sometimes willing to compete with one another. As a result, median home prices have crept up in many jurisdictions this spring.

Of course, the housing market is still not where we’d like to see it. We continue to see too much foreclosure activity, which won’t help. May was the third highest month on record for foreclosure filings, according to RealtyTrac.

More foreclosures will mean more homes coming on the market, and that makes things harder on sellers. Mortgage interest rates have risen, which makes things harder on buyers. If rates rise too far, it will dampen buyer enthusiasm and slow the recovery.

For now, however, there are reasons for cautious optimism in the Washington region.

- Chris Sicks

* Contact 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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