What’s in store for the Washington, D.C. real estate market in 2011? According to some of the latest housing-market data and predictions, Washington, D.C. could be one of the most stable metropolitan areas in 2011.
Washington, D.C. Housing Market in the News
The most recent S&P / Case-Shiller home index (released at the end of December 2010) showed that home prices fell in all 20 of the monitored metro areas. But out of all 20 metropolitan areas, the Washington, D.C. real estate market fared the best. In both the monthly and yearly categories, home prices in Washington D.C. were the most stable.
The price drop from September to October was only 0.2 percent. The annual data showed a better picture, with a 3-percent rise in prices from October 2009 to October 2010. This was the strongest annual gain of all monitored metro areas.
In December of 2010, Veros Software, a California-based technology firm that serves the financial industry, predicted that Washington D.C. would be one of the strongest real estate markets in 2011. Specifically, they said it would be one of the five strongest metro areas in terms of appreciation. The company feels the D.C. metro area could see home-price gains of 2.5 percent, between now and December 2011.
In January of 2011, Clear Capital released a home-price forecast for 2011. Located in Truckee, California, Clear Capital provides appraisal / valuation services for the financial industry. Translation: They study home values for a living. According to their predictions, the Washington, D.C. real estate market could see the most home-price appreciation of any major metro area. An excerpt of their report is shown below.
As you can see, the company feels that home prices in Washington will increase even more in 2011 than they did in 2010. If this forecast holds true, it gives D.C. homeowners reason to celebrate.
According to Jim Diffley, an economist at IHS Global Insight: “Given the area’s employment picture, we feel there is less risk of a [price] fall in the Washington region than in other parts of the country.”
Even as “far” back as February 2009, Forbes had listed Washington D.C. as one of the most stable housing markets in the country. That time frame could be viewed as the turning point for the D.C. real estate market, when home-price declines began to slow down considerably over the years prior.
2011 Market Drivers – Inventory and Unemployment
The question is, will home prices in Washington, D.C. decline, flat-line or increase in 2011? All of the sources mentioned above seem to agree that things are looking up.
For the most part, the answer lies within two key factors — unemployment and inventory. If the district experiences continued job growth in the new year, housing demand should rise. This would put upward pressure on home prices. But a large housing inventory (worsened by home foreclosures) could negate any upward ticks in housing demand.
Only time will tell, of course. But if I were a potential home buyer in Washington, D.C., I’d probably make my move in 2011. Mortgage rates are expected to remain below 5 percent for the first part of the year, and home prices are equally attractive. Add in a dose of market stability, and you’ve got prime buying conditions.