- The Washington Times - Thursday, January 13, 2011

December was the slowest sales month of 2010, but that’s not a surprise. In the Washington metro area, the last month of the year always has the lowest number of home sales.

So we need to compare last month to previous Decembers if we want to evaluate how things were at the end of 2010.

Compared to December 2009, sales were down by 4 percent, and compared to December 2008, they were 3 percent lower. So sales definitely were lower than they’ve been in the past two years.

If you want to find a silver lining, you need to compare December 2010 to December 2007, which was the worst year for area home sales. Just 3,744 existing homes were sold that December. Last month was 36 percent higher than December 2007.

Why expend all this ink writing about old statistics? Because while everyone is more interested in the 2011 market, we can’t begin to anticipate what this year will be like unless we understand sales in recent years.

I think we have some reasons to be encouraged about where things stand regarding sales figures. Even without the federal tax credit that boosted sales in December 2009, we managed to sell more than 5,000 homes last month. The disappearance of the tax credit didn’t plunge sales back to 2007 levels.

There won’t be a homebuyer tax credit in 2011, but unless the local economy takes an unexpected turn for the worse, real estate should be all right this year.

The two unknowns we have to watch for are mortgage interest rates and foreclosures. Rates have been unbelievably low for a long time. Some think they will rise in 2011, which could dampen sales - after a brief sales boost from folks who are prompted to act before rates rise any further.

The other unknown is foreclosures. If banks begin working through the backlog of delinquent borrowers and foreclose on a lot more properties, that could add to the inventory of unsold homes in the region. It won’t dampen sales necessarily, but it could put a drag on the market and prevent prices from recovering.

Send e-mail to csicks@gmail.com.

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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