Real Estate Agents Seeing Early Bursts of Home Buying
by Melissa Castro, Staff Reporter
April 3, 2009

Residential Real Estate Rebounds

Just as surely as tulips and daffodils poke out of Washington’s moist spring soil, homebuyers are waking up from their own long hibernation. This time, though, they are ready to make deals.

Local real estate agents say the market has returned with a furor in the past month, leaving agents not washed out by the economic storm scrambling to keep up with a burgeoning swell of buyers at all points on the price spectrum.

On the last Sunday in March, nearly 200 people coursed through an open house for a $1.6 million red-bricked row house at 1511 Q St. NW, tucked between the Dupont and Logan Circle neighborhoods.

It was the busiest open house Coldwell Banker agent Dwight Mortensen has hosted since he began selling homes in 2002.

Just in case an improving market for home sales wasn’t enough to attract real estate agents to an open house near Dupont Circle, Coldwell Banker agent Dwight Mortensen, third from the right, sweetened the deal with snacks, which brought in Jim Norris of W.C. & A.N. Miller, left, and Alex Gabriel of Wells Fargo Home Mortgage.

“Literally, within an hour after we loaded the listing online, 42 people clicked on it,” he said, wiping sweat from his brow after baking miniature cupcakes for a special weekday open house to show the home for other real estate agents.

The four-bedroom house drew nearly 50 agents to Tuesday’s event. “We only came for the red velvet cupcakes,” Mary Jo Wilson, an agent at The Long & Foster Cos.’ W.C. & A.N. Miller branch said with a wink as she passed Mortensen.

The mood was light in part because agents are feeling an optimism that has been missing since the local market started its slow but steady decline in late 2005. It’s an optimism that can’t be explained by the official statistics, which lag behind the current market and showed fewer listings, fewer pending sales and fewer settlements in D.C. this February than last.

D.C.’s February sales volume dropped more than 30 percent from February 2008, and the median price — the price at which half the houses sold for more and half for less — dove 13 percent, according to data from the area’s multiple-listings service, Metropolitan Regional Information Systems Inc. (The average sold price was down just 6.78 percent from the previous February.)

And while homes took an average of 92 days to sell last February, houses sold this February had languished for 112 days.

Yet today’s exuberance isn’t entirely irrational. Preliminary March numbers show the volume of pending sales is up 11 percent from last March in D.C., and many agents say they are even dealing with bidding wars again.

Mortensen’s Dupont Circle office dealt with 12 multiple-offer situations last week, said his managing broker, Kevin McDuffie. One of McDuffie’s agents wrote offers for five homes the week of March 23 — only three were accepted.

That does not mean prices are escalating into the stratosphere, though. The winning bids typically come in at or just above the asking price, with very few contingencies for inspections, appraisals and the like, McDuffie and others said.

“It’s definitely different now,” said Chuck Ruoff, an agent in Coldwell Banker’s Georgetown office. “People who are out are seriously looking. They’re not just curious.”

Why is it different? Joseph Himali, a self-employed broker who presides over the Greater Capital Area Association of Realtors, said he thinks both the economic crisis and the federal government are responsible for the turnaround.

“The low, low end of the market is red hot,” he said. “In Prince William and upper Montgomery counties, you’re starting to see them clear inventory just as quickly as they come on the market.”

The preliminary numbers appear to bear that out.

Compared to the same time last year, pending sales were up 47 percent in Fairfax County in March and 32 percent in Montgomery County, said Fred Kendrick, a number-crunching associate broker at TTR Sotheby’s International Realty. Pricing in both of those markets has been under duress from the subprime mortgage crisis.

And, while everyone would like to score a rock-bottom deal, the excitement — at least in the District — isn’t limited to the foreclosure and short-sale markets.

“Buyers aren’t just looking at foreclosures anymore — they’re actually looking at real property,” said Mary Jane Molik, one of Wilson’s colleagues at W.C. & A.N. Miller.

Last summer, Molik said, she regularly fielded calls asking if her listing was a foreclosure. When the answer was no, the line would go dead. The pressure pushed the price of one of her otherwise non-distressed Gaithersburg listings from $675,000 down to $499,000.

Now, with the government offering incentives to lure buyers, even fully priced property is selling again, as long as it is in good condition and priced fairly.

“Looking at the $400,000 to $700,000 range, the market is still very, very strong because of the low interest rates and the $8,000 tax credit,” Himali said.

Even the condominium market is starting to pick back up, as the “Let’s Make a Deal” days with struggling new-construction developers wind down.

In the upper pricing echelons, things aren’t quite as rosy. “People in the $700,000, $800,000 or $900,000 range are too wealthy to qualify for that stimulus [tax credit],” Himali said.

They are also having trouble finding financing for those loan amounts, which exceed the $729,750 cap on loans the Federal Housing Administration, Fannie Mae and Freddie Mac will buy.

As a result, the upper price range is simply “warm,” Himali said. “People are interested and excited, but they go out and see that interest rates are high, that they need a lot of cash and good credit, and they become a lot cooler to the idea of buying a new home.”

The tumultuous 2008 market flushed out many real estate agents who were lacking the experience, savings or intestinal fortitude to ride out the turmoil. McDuffie’s Dupont Circle office opened with just seven agents in 2004 and swelled to 87 by 2007. Last year, 20 or so dropped out of the mix.

The survivors are working hard to market property, counsel timid buyers and terrified sellers, and constantly adjust prices.

“I’ve been licensed since 1981, so I’ve seen this culling of the herd before,” McDuffie said. “This crisis has really put everybody on notice that you have to be serious about your business. I have more agents doing business plans and thinking about their careers now, because you can’t just wing it anymore.”

Mortensen’s business partner on the $1.6 million Dupont house, David Bediz, had jumped into the business in 2004 while the market was hot. Their hustle and drive — and Bediz’s experience with Internet marketing — have kept them among D.C.’s top producers, but it hasn’t been easy. “It’s twice the work for half the money,” Bediz said, offering another cupcake.