Uncertainty Defined Housing in ‘07
Sense of realism essential in today’s real estate market.
By Aaron Stern/The Almanac
January 4, 2008
Hill Slowinski, a Realtor with W.C. & A.N. Miller, sold a house on Falls Bridge Road in the middle of December just three days after he listed it. That is not something potential sellers should expect.
“Houses will take normally longer now than they did a year ago, two years ago,” Slowinski said. “Thirty, 60, 90 days is much more common now than it was in 2005 when 20 days was average.”
The real estate market that boomed over the past several years returned to earth following the effects of the problems with the sub-prime mortgage market in 2007.
The fallout of the sub-prime mortgage market had an indirect effect on Potomac real estate, said Andy Alderdice, a Realtor with W.C. & A.N. Miller.
“The real estate market was hesitant,” said Alderdice about Potomac real estate in 2007. “I do think the sub-prime loan market had a little bit to do with it, especially in the media. People were so focused on it that they just kind of stopped.” The collapse of the sub-prime market wasn’t a surprise, said Alderdice, and its effects were predictable.
“The old rule of thumb [to determine if a home was affordable] was to take your annual income times three, and that’s the price of your home that you can afford,” Alderdice said. “The last five years, people were using factor of five.”
The result was a false sense of security in overspending, Alderdice said. “It was just asking for trouble, I think. That did shake the foundation of [the market], and the people in the upper market… their confidence in the market was shaken.”
THE GOOD NEWS is that houses still sell, said Slowinski. The key is to show the house as well as possible and to price it reasonably. “They have to be priced right, they can’t be this artificial inflated number and they have to show very well with some, or most amenities updated,” said Slowinski.
The three-day listing on Falls Bridge had been upgraded periodically in the last 10 years, with an addition built most recently earlier in 2007. “It was clear that the owners had continued to maintain the house with care,” said Slowinski.
“To be a win-win situation you have to have the buyer and the seller work together as a team,” said Laura Gilley, a local Long and Foster Realtor. Sellers should be prepared to help buyers with closing costs and buydown points if necessary, Gilley said.
Sellers also have to be realistic. They can’t expect to get prices that their neighbors were getting two and three years ago, Alderdice said, and they have to make the house show as well as possible.
“Sellers, if they look at it, are probably not going to get what their neighbors got last year,” said Alderdice. “If the houses are cleaned up and priced well, we’re still seeing multiple offers.”
Sellers also need to be patient, Gilley said. “What used to take a month [to sell] is taking four months,” said Gilley. That trend has led to a greater inventory of homes on the market, said Alderdice, and as a result it is becoming a buyers market.
“If the seller is serious about selling they should be open to any kind of offer that might come in,” said Alderdice. The good news is that Potomac will always be a desirable market because of its character and close proximity to Washington, D.C., said Gilley. It is also important to remember that the real estate market will rebound eventually.
“That’s just the way it goes, it’s all cyclical,” Alderdice said. Gilley offered a tip to those not looking to sell. “If you want to refinance, go do it now, because [lenders are] giving you incentives,” said Gilley.
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F. Hill Slowinski, JD, WC & AN Miller Realtors, A Long & Foster Company
4701 Sangamore Road, Bethesda, Maryland 20816
Cell: 301-452-1409 Direct: 301-320-8430 Ofc: 301-229-4000
Email: hslowinski@longandfoster.com or Hill@HillSlowinski.com
