The Real Estate Market continues at a hectic pace as we get into spring here in DC. From January until the end of spring, we receive a lot of first time buyer inquiries. This is excellent news that the market hasn't scared them off, and it's also important that first time buyers continue to jump into the market to keep the Real Estate Cycle of Life moving. Interestingly, many, if not all of these buyers, have the same basic inquiries and market perceptions.
In any market, whether it is DC or another city, the market value of real estate directly corresponds to location and property condition. This means that it's highly unlikely (read: impossible) that you will find a foreclosure or diamond in the rough in an area that is sought after. In DC, areas near metro and retail are all high in demand. This means, unfortunately, that there just won't be a $200,000 condo overlooking Logan Circle, nor would there be a $500,000 single family home in AU Park where the schools are in high demand.
Let's review the most heard comments on a buyer's wish list:
I'd like to be in an "up and coming area" that will "increase in value."
We hear this so often that it almost seems funny. There isn't an up and coming area in DC any longer. When places are up and coming, the majority of buyers are reluctant to live there because "up and coming" usually comes along with a lot of downsides: poor housing stock, crime, unsavory neighborhood situations. Also, for any agent to predict an up and coming area and/or a promised value increase is reckless as far as I'm concerned. We do not have crystal balls. We can tell you where the movement of buyers seems to be headed, but we can't make any guarantees. And we can tell you what property values have done in the past but no one can predict the future.
There are definitely areas that are walkable. I find most of the city to be walkable. But what it's walkable TO is another factor entirely. See #3.
Near restaurants and stores
DC is not a city like New York. We have areas here which are residential only and areas which are mixed use. Unlike New York, there isn't a restaurant on every block here. Living close to these areas carries a premium.
Living near a metro also carries a huge premium. As parking becomes more difficult in the city, oddly, it's not as highly desired as proximity to metro. Roughly half of new buyers want off-street parking. But probably 90 percent want to be close to metro. But what is close? For some, walking a mile to metro is fine. Those people will have a good chance at finding a home. For others, 2 blocks to metro is the max they will walk. Those people need to get the wallets out. And now, about that money.
I'm not sure what it is but often after I'm given the wish list that includes items 1-4, the buyer will then state their price. Sometimes they've done some research online to determine what their desires will cost, but I'm actually surprised at how many people haven't. They will often be hundreds of thousands of dollars off the mark. It's just surprising because everyone has internet access, and could do a basic property search to find out what price ranges are, so when we hear that someone wants a 3 bedroom single family house next to a metro stop for under $300,000 and it needs parking and to be close to lots of fun shops and restaurants, it's hard not to fall off our chairs. It might be possible in another city, or in another decade.
We're not afraid to do a little work and renovation
Yes. You are. Trust me. Every single buyer who fancies themselves an HGTV junkie is going to be the same buyer who thinks they are handy and want to fix things up. It's painful to fix things up and live in construction squalor. Everything takes three times as long and costs three times as much as you think it will. No, trust me. You don't want to renovate.
I'm open to foreclosures and short sales
These are rare. So rare, that the few that are in existence have serious problems and until the bank behind the curtain making the decision is ready to sell, the property will likely sit a long time on the market. They're rarely worth the time and effort they take and often aren't that much better of a deal because the list price is just a guess - the bank often counter offers you at higher than the list price.
Advice for new buyers is this. It boils down to the old adage of "you get what you pay for." Google Earth is your friend. When you see a house that looks like a great deal, check it out on Google Earth instead of trying to see it in person first. Look at the neighborhood. Put the address in to the Metro Crime Stats site to see what goes on in the area.
And finally, be realistic about what your budget constraints are. In this crazy market, you would be wasting time if you are searching for a house way below market value in the middle of the action.
Melissa has been in the Real Estate Industry for 14 years and is a Realtorￂﾮ with City Chic Real Estate in Washington, D.C.