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Not a Sellers' Market

Edward Berenbaum makes his living selling other people’s homes. But last month, the co-owner of Redwood Realty in McLean sold his own home.

“I got my asking price,” said Berenbaum. “I was tempted to put it on [the market] for $45,000 more.” Instead, he decided to be more conservative in hopes of attracting more potential buyers.

The plan worked. While the average home in the area now lingers on the market for more than five weeks, Berenbaum’s home sold in less than three.

“In a market like this you can’t be overly aggressive,” said Berenbaum, who has been a Realtor since 1997. “The penalty for being overly aggressive is that no one looks at your home.”

For many people who are selling, it’s been a tough lesson. Over the last five years, sellers enjoyed quick sells for prices beyond what was asked. But that’s changed.

FOR THE NINTH consecutive month, inventory in Northern Virginia has increased compared to a year ago. In November, inventory spiked 258 percent compared to last year. This time last year 1,883 homes were on the market. Now there are 6,744.

Inventory began to skyrocket this year in May, and around the same time sales began to drop. In November, sales dropped 28 percent compared to last year, according to the Metropolitan Regional Information Systems, Inc. November marked the second month in a row when fewer than 2,000 homes were sold.

Declining sales have been the trend this year, occurring in all but three months compared to last year. In October, sales also dropped by 28 percent, which at the time was the largest percentage decrease of the year. According to figures from MRIS, sales in September fell by 14 percent compared to last year. In August, sales dropped 8 percent compared to last year.

But, prices have continued to increase at a steady rate. In November, prices increased 21 percent compared to last year. In fact, every month this year has seen a 20-plus percent increase in home prices compared to the previous year.

“It’s probably safe to say that the great appreciation levels we’re used to are going to slow down,” said Angela Gates, a spokesperson for the Northern Virginia Association of Realtors. “But it will still be a very good return for homebuyers, especially people who are buying a home for the long-term.”

But prices seem to be leveling off. The average home price peaked in July at $559,790, but since then the price has fallen. In November, the average home sold for $545,311. In October, the average home sold for $550,069.

The rise in inventory suggests that the market is shifting toward a seller's market. “[The market’s] flipped,” said David Meyers of Meyers & McCabe Realtors in Burke. “Now, it’s a buyer's world. I feel good about it because, we know how much buyers have been beat up.” Several Realtors, including Meyers, said that home inspections and appraisals, which were commonly waived by buyers just eight months ago, are now the norm. “I haven’t seen multiple contracts in a while,” said Meyers.

DESPITE THE CLIMB in inventory, the overall feeling is that market forces are heading toward equilibrium. “[The increase in inventory] has helped the market become more healthy,” said Gates. “Part of the reason this seems like such a high inventory is because we’ve had historically low inventory for the past five years.”

Chris Fries agreed. “I think we’re going back to a more stable market,” said Fries, a Realtor with Coldwell Banker in Alexandria.

But, now more than ever, Fries said, sellers have to be careful about how they price their homes. “Every seller I’m working with is assessing the price they have now, deciding whether or not to lower it or hold out through the winter,” said Fries. “People holding tight on price seem to be sitting active on the market.”

Fries said he has noticed how the rise in inventory has increased competition in neighborhoods where several homes are on the market at the same time. “I’ve seen 25-plus properties on sale in one immediate subdivision,” said Fries. “Without a doubt that increases the days on market, and if the house is not in pristine condition, it’s forcing the price down.”

WHETHER HE’S SELLING a client’s home or his own, Berenbaum is espousing the same message.

“It’s a rough market if you’re not pricing your home appropriately,” said Berenbaum. “The fact is, if you’re not priced right, you’re not going to sell.” He said the homes that sold in November were homes that were priced “really well.”

“In the grand scheme of things, I think the market got ahead of itself and now it’s stabilizing,” said Berenbaum. “My guess is we’re still going to have a pretty good market in 2006.”