Michael Moore is a senior vice president for Compass Real Estate in D.C. and has worked as a D.C.-based Realtor for 30 years. Lee Ann Wilkinson is CEO for the Lee Ann Wilkinson Group associated with Berkshire Hathaway Home Services-Gallo Realty in the Rehoboth Beach, Del. shores area for 38 years selling real estate.
Both have told the Washington Blade that beginning in the late spring of 2020 and continuing now in the spring of 2021, they have never seen such a booming real estate market, with the demand for houses and condominiums wildly exceeding the supply.
“Well, it’s been a spring market on steroids,” Moore said. “I’ve never seen a spring market like this. Everybody is fighting for properties,” he said. And it’s not just Chevy Chase, Bethesda, and Alexandria. It seems to hit everywhere.”
Wilkinson, who has real estate offices in Rehoboth and nearby Lewes, Del., agreed with Moore and other Realtors that the far greater demand for properties than the available supply in their respective areas has created a seller’s market, requiring buyers to pay far higher prices than they originally expected.
“I’ll characterize it this way,” Wilkinson said when asked how she views the spring real estate market in her area.
“It’s next to impossible. It is so, so lopsided. Inventory is so low that there are 10 buyers for every one property that come on the market,” she said. “So, yeah, it’s the lowest inventory we’ve ever seen. And the buyers are off the chart. So, it’s very difficult.”
The difficulty, both Wilkinson and Moore said, is helping their clients who want to buy a house, or a condo navigate an almost never-before-seen frenzy of competition for the relatively few properties that come on the market.
“Areas that never saw multiple offers are now seeing multiple offers,” said Moore. “I’m seeing escalations in excess of 30 percent” in the selling price over and above the original asking price, he said. “Some properties are going 130 percent over their listing price.”
Moore, Wilkinson and two other Realtors with whom the Blade spoke about the current market all agree that the record low interest rates on home mortgages during the past year or two has played a major role in the growing number of home buyers.
But they and other observers of the real estate market have said the COVID pandemic appears to also have triggered a greater demand for home buying in what some are calling an unexpected development.
Moore and Wilkinson said the near total business shutdowns in the first few months of the pandemic last year did cause a small slowdown in the real estate market in both the D.C. area and the Delaware beach areas. But the two and others have said the market quickly picked up in late spring and early summer and through the remainder of 2020, with home sales and the demand for homes surpassing that of the previous year before the pandemic surfaced.
The upsurge in the market has continued into the spring of 2021, according to Moore, Wilkinson and others.
Some observers have said the fact that the pandemic forced a larger than ever number of people to work at home appears to have prompted many homeowners to consider continuing to work at home after the pandemic. In thinking of doing that, many have decided they need a larger home or a home in a different location. That apparently has sparked a new demand for home buying in addition to the low interest rates.
Wilkinson said that while the large demand has clearly put sellers at an advantage over home buyers, some potential sellers are discovering that while they stand to reap a handsome profit for the sale of their home, they cannot find another home to move into within a price range they can afford.
“We have sellers who were with their home and say, oh my goodness, we’re going to get all this money,” Wilkinson said. “And they get a contract and all of a sudden, they can’t find a house for themselves and then they want to back out of the sale because they don’t have anywhere to go,” she said. “It’s so unreal.”
Dual homeowners who decide to sell a second home at the beach or elsewhere and who choose to live full-time in their primary home are now in the best position to make a windfall profit on the sale of their second home, Realtors are saying.
Moore said the decision by the Internet sales giant Amazon to open its second national headquarters in the Crystal City and Pentagon City sections of Arlington, Va. appears to have had an immediate impact on the real estate market in that area two years ago when the announcement was made. He said the market could receive a boost in a few years, when the Amazon buildings now under construction are finished and hundreds more employees move to the area.
But according to Moore and other Realtors, the announcement two years ago that Amazon would move to the area prompted investors to “scoop up” large numbers of condo units and some smaller houses in that area as investment properties that they could sell for a profit in the next few years.
The Realtors with whom the Blade spoke said the prices now for a typical three-bedroom, two-and-a-half-bathroom house in a desirable neighborhood convenient to nearby amenities or a Metro station in the recent past were available from $900,000 to $1.1 million. But now almost no similar houses can be found for under $1 million and most are in the range of $1.2 million to $1.4 million or higher.
Two-bedroom condos in most D.C. areas are now selling for about $700,000, with one-bedroom condos going for between $500,000 and $600,000. Realtors say condos and houses can be found in some areas considered “emerging neighborhoods” at lower prices.
Robert Sanders, senior vice president of TTR-Sotheby’s International Realty in D.C., and Chuck Burger, a longtime Realtor with D.C.’s Coldwell Banker Realty office on Capitol Hill, each said it has become much harder for first-time buyers to find a house or condo that’s within a price range they can afford.
“I’m watching some of my buyers backing off now because the sellers have been commanding so much money and getting it that the buyers are afraid,” Sanders told the Blade. “You know, how are they going to get that out in the next couple of years? Are they going to be under water because they paid so much for it?” he said.
“So, I’m starting to see buyer fatigue, which sort of makes me a little nervous about that,” Sanders said. “But you know, even a market correction is good for everybody.”
By market correction, Sanders was referring to the term used by Realtors and economists for when an overheated market “corrects” itself when prices come down due to various reasons, including a rise in home mortgage interest rates. Going “under water” refers to when the value of someone’s house falls below the balance of the mortgage on the house.
Moore points out, however, that the D.C. area within the Beltway has historically been immune from severe market corrections. He notes that at the time of the steep real estate market decline in 2008 and 2009, where the home and condo market in places like Florida and other states dropped sharply, the D.C. area saw a slowing of the market increase but no decline in home values occurred.
“It was like we were we were totally unaffected by the real estate debacle that happened in 2008 and 2009,” Moore said. “So, what I think is going to happen here is that it will probably plateau a little bit. But I think we will always have property appreciation,” he said. “We’ve never had a correction which meant negative numbers.”