Outlook for 2013

As we hit mid January and the threat of the fiscal cliff is behind us. I feel that this is a good time to write a brief  post on the current market for the Metro area and state where I think we are heading. First and foremost, the real estate market is looking pretty darn good. Well, darn good for sellers that is . Not so much for home buyers who are facing a shortage of suitable homes to look at and a very competitive market in most jurisdictions. It is hard to believe but we are experiencing a critical shortage of listings on the market. We simply have very little inventory to offer home buyers. And, this shortage of homes for sale means that there will be pressure on home prices to go up. We are already seeing may full price and above price offers, along with multiple offers coming in. A well priced home that has been updated will not usually go unsold for more than a few days.

The improved market is visible everywhere around Washington DC and it's suburbs but some jurisdictions and price ranges are seeing it have a more dramatic effect. The best market is in the District and Montgomery County but even Prince Georges County which had been hit very hard by the downturn and featured a record number of foreclosures and distressed homes is finally beginning to turn.

There are a variety of reasons for the shortage of listings for sale. A lot of unsold homes were taken off the market and rented out by the owners. Many of these homes are now tied up in long term leases. Also, there are still a lot of  "underwater" homes out there and many homeowners who survived the downturn and do not have to sell will opt to wait for prices to go up before selling. I expect to see more homes on the market as the weather warms this year but also expect to see more buyers out there as our local economy continues to expand. For this reason I do not foresee listing shortage situation improving this year and predict that we will be in a good market for home sellers all year. And this means that home values will have to go up.

For a detailed report on the current market data click here.

Montgomery County MD Rapid Transit Busways

Good news today in the Washington Post about the Rapid Transit Busway. This idea has been gaining momentum over the past two or three years as a solution to our traffic woes and alternative to the more expensive light rail systems that have been in play for some time now. After seeing a presentation on the advantages of busways, I personally think that there is very little reason to opt for light rail systems. The busways are cheaper to build and run and less disruptive to the communities that they run through in that they do not require as much construction time and lessen the need to condemn private property. These high speed bus lines will hopefully flow down the major arteries of the county and give commuters an alternative to driving. The attached photo is of the Busway located in Los Vegas so that you can get an idea of what it might look like.

State of the Market

As we wind down 2011 and head into 2012, I think it is a good idea to give you a few of my thoughts on the market and what to expect in the next year. 2011 was an erratic year for real estate in the Washington area. What looked liked to be shaping up as a decent year this past spring came to a screeching halt when congress got caught up in the budget crisis. The situation never really got better as we passed from one crisis to another. Right now with the uncertain financial situation in Europe the market remains in the doldrums. It is hard to find much in the way of consumer confidence when everybody is worried about the global financial situation. The problem is not being helped by the partisan battles that continue to plague our own congress.

The good news is that there will be a housing recovery and prices are bound to go up. The bad news is that nobody really seems to know when this will happen. Some areas in our regions have felt the pain a lot more than others. The western portion of Montgomery County is doing well and the District seems to be one of the strongest real estate markets in the nation. But the rest of the region is still bothered by low prices, high inventory and an abnormal number of distressed properties that keep prices depressed.

But there is one thing that I do know and feel pretty confident about. Recessions do eventually end and when they do, area property values in this area should rebound and prove to be very healthy. I firmly believe that the Washington area is one of the best places to own property. My 25 plus years in the industry and proved this to me. We are going to be just fine. Just be patient and give it a little time.

Where are we going?

Well, there is not much I can say about the housing doldrums that we are going through right now. However, I caution all against using this recession as a gauge for analysing the housing market in Montgomery County and the metropolitan area. Housing prices go up and down with the economy-there is no secret about that and with the large recession of the past few years prices are down. I have seen it before and know that you cannot allow a few years of recession to bias your thoughts about property ownership. I tell all my clients that real estate should always be looked upon as a long term investment. If you happen to buy at the right time and reap the benefit of a rising market, so be it. However, you can also get caught with your fingers singed if you purchase at the wrong time and are looking for a quick gain.

Now, just look at Montgomery County and the long term projections for population growth. With just over a million residents now, it is projected that the population of the county may double within the next 25 years. With this influx of people comes job growth and most importantly demand for housing. People have to have homes and the fact is that much of the county has already been built out. There are two predictions that are of interest. One, is that due to the lack of suitable housing more people will be forced to live further out from their jobs (Frederick, Howard, Anne Arundel Counties) and commute longer distances. And as a result, the demand for homes that are in Montgomery County will be very high. So high in fact that the long term concern is that there will be a critical shortage of housing in the county far into the future and that home values "will go up" to the point where new residents will be priced out of the market.

In short, more people and not enough homes. What does this tell you about the overall value of homes in Montgomery County? This is not rocket science. If you can look beyond the current recession then you will see that over the long term this is a great place to buy property. It has been for the last half century. Recessions come and go but for the long term, owning a home in Montgomery County is a good thing. I would think that this data applies to the Washington Metro Area in general and expect the housing market for the overall area to be strong once the economy gets back on track. In short, buy property and plan on holding it. Property in the area is cheap now. It won't be for long

Montgomery County's Fiscal Woes. Part 1

Well, the county is pretty much out of money. They are looking for ways to raise revenues but the issue becomes where and how to squeeze the public without the public screaming and kicking back. The problem is that there is no way that they can raise property taxes. Already having sucked that cow dry when times were good they are now in a pickle as to where to turn. The solution seems to raise fees. Everywhere you look fees are going up. Parking, tickets, licensing fees, recordation fees, library fees and death fees. Not only is this happening in our county but everywhere. National, state and local governments used to feeding off property taxes have turned to increased fees to cover the shortfall. And I ask you who is not feeling these costs.

The big issue to me is how do they expect for any sort of recovery to occur if they are slamming consumers with burdensome fee hikes. I did not have a bad year this past year but am feeling the pinch of higher fees so both my wife and I don't feel like we can spend any money. I can't see how all of these fee hikes are going to do much for our household income. So nobody feels any wealthier and nobody feels like spending money. And getting people to spend money is how you dig yourself out of a recession.

This seems to happen every time we have a downturn. I wonder why the hell can't our elected officials figure this out when the economy is booming and set aside reserves for the slow times. I suppose it is just human nature and the way our system works. When we have it, we spend it all and then when we don't have it we fly into a panic. The public then suffers because there are few options to getting lost revenue unless they squeeze the cow a bit more.