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High-end Home Sales Slow but Strong

Although a new National Association of Realtors report shows a jump in home sales in October, it is now taking longer for houses priced over $1 million to sell, according to some local real estate agents.

High-end home sales are often the first to cool off in a down real estate market and could be a concern in Potomac, where nearly 10 percent of the homes are priced at $1 million and above.

"It is the softest spot in the market right now," said Dave Kolakowski, a Bethesda buyer broker, citing a glut of homes in Montgomery County priced at the $1 million level.

Potomac's 20854 zip code alone currently has 25 $1 million-$1.5 million homes for sale according to the real estate research Web site, homesdatabase.com. The nearby 20817 zip code has 15 homes for sale in that range. By way of comparison, the rest of Montgomery County has 42 homes for sale in that market — nearly matching the total numbers for 20854 and 20817. There were also 48 high-end homes newly listed in the county in October of this year, compared to 34 from the year before.

"It is a supply and demand issue. There are more high-end houses than there are buyers, due to the economic downturn," said Kolakowski, vice president of the Buyer's Edge of Bethesda.

HOWEVER, Potomac brokers say that even though sales of expensive homes might be taking a little longer, they are still selling at a good pace, with sales of $1 million and up homes increasing by 55 percent between 2001 and 2002.

"You are seeing the same thing from San Diego to Boston when it comes to $1 million to $1.5 million sales," said Rick Campbell, managing broker of Weichert, Realtors in Potomac Village. "The market is still doing as much business. What is happening though, is the listing to sales process is taking much longer. There is much more inventory on the market. Before you had three to four contracts within three days of a listing. Now it can take three weeks.”

Even so, Bob Moorman, Potomac Village manager for W.C. & A.N. Miller, remains optimistic. He cites an increase in $1 million home sales in 2002 compared to 2001, and good autumn sales for 2002.

Statistics from the Greater Capital Area Association of Realtors confirm his optimism, showing a 20 percent increase in home sales contracts for homes priced at $1 million and up in Montgomery County in October 2002, compared to October 2001.

"It comes down to a supply and demand issue," Mormon said. "There is no more land to build in on in the area."

Indeed, the Potomac Subregional Master Plan shows that after skyrocketing development in the area during the last 30 years, growth will be substantially slower through 2020, particularly when it comes to new homes.

Campbell is optimistic too, despite the recent slow down.

“For the first time in a long while we have sellers calling us, upset that their homes are not selling. Buyers are being more careful," said Campbell, who asserts that the new year will continue to be good for the real estate market. He looks at the situation like a cake.

"Unemployment is going down, and [Allan] Greenspan is working hard to help the market. All the ingredients are there for success at the high-end level in the new year," he said.