For years, the D.C. housing market has left many searching endlessly for homes, often leading buyers outside the city.
Like most places around the country, buyers seeking homes in the nation’s capital remain increasingly at the mercy of the seller.
Simply put, America’s witnessing one of the most heated seller’s markets in decades.
The most recent statistics from the firm McEnearney Associates show contract activity in April up 109 percent over last year. Sellers who put their homes on the market are averaging just a 30-day stay on the “for sale” list.
The number of new listings coming on the market increased 91 percent compared to last April – and much of that was condos, the report noted. The increase in contract activity more than offset the rise in inventory, lowering overall supply to 1.5 months from 2.6 months at the end of April 2020.
And sellers continue to make a windfall. The average sale price for a home in the District in April stood at $799,024, more than $65,000 over the April 2020 median.
The District also enjoys the region’s highest average and median sales prices by more than $79,000.
“The real estate market for home buyers is on fire right now,” said Sunny Mills, the design and project director of YogaClub.
Mills said the question everyone keeps proposing: when will the market slow down and is it too late to buy?
“Right now, I do not see the market slowing down anytime soon. If you see a deal and you are ready to buy, I suggest you do just that,” Mills said. “Everything looks as if it is going to continue to trend up. What most people will have to get over is the idea of potentially buying a property at a higher price. There is still time to get a great deal that will pay dividends down the road.”
Others offered similar advice to those desperately trying to buy in a challenging market.
“One of the crucial things our successful buyers include in their offers to get them accepted in today’s crazy market with never-ending bidding wars is a rent-back period for the sellers,” offered Michele Harrington, the CEO of First Team Real Estate. “Sellers have the upper hand when they place their property on the market but finding a replacement home as a buyer themselves is tough. No one has been accepting contingent offers, so savvy buyers will include a rent-back period of 30 to 60 days to their sellers so that they can shop for a new home without having to move twice.
“Once the sale goes through, and they are no longer contingent, the sellers have the time to house hunt and make a strong offer of their own to be accepted on their next house. Some buyers even make the first 30 days of the rent-back free because the first month’s mortgage is already paid,” Harrington said.
Maceo Clark, a senior mortgage banker at EagleBank in Bethesda, said buyers must pre-qualify with a lender and have all their paperwork together even before looking at a home to purchase.
“Have extra cash on hand in case you have to overbid to make the offer more appealing. Agents like when you have a larger down payment on the pre-approval letter,” Clark said.
He also concurred that buyers should offer rent-backs.
“People are selling and cannot find a new place to buy, so they need to stay in the home until they find a new one. Offer up a 25-30 settlement period,” Clark concluded.
Finally, Bill Samuel of Blue Ladder Development advised that buyers present offers that clearly document their qualifications.
“There is no chance you will win a bidding war without a pre-approval attached to your offer. I would submit every document your lender of choice asks for to get the pre-approval,” Samuel expressed. “It is important to understand that the strength of financing is a key consideration a seller considers when selecting an offer. Of course, a cash offer would rate the strongest in this category.
“Then a high down payment conventional loan being next in line and desirability with a conventional loan decreases as the down payment does,” he said. “The FHA and VA financing would be the least desirable type of financing for this category. Cash is preferred because there is no risk of the buyer not qualifying for a third-party approval.
”If you really like the property, then you should sit down with your agent the same day to go through the comp research for one to two hours and work on putting together an offer,” Samuel said. “If you are interested in a property, you must act quickly, or you risk losing it to another offer.”
