Bubble Deflates Slightly, But Far from Bursting

Bubble Deflates Slightly, But Far from Bursting

Realtors say pace of sales has slowed, but market is strong.

Realtors have had to dust off a few yard signs recently that they haven’t needed in months: “price reduced” and “still available.”

In Montgomery County, there are 30 percent more houses on the market now than at this time a year ago, according to the Metropolitan Region Information System, which tracks real estate sales.

IN SEPTEMBER, the average sale price of Montgomery County homes was off 20 percent from last year and the average number of days on the market was up slightly.

But those changes aren’t setting off any major alarms. The 30 percent spike in listings seems trivial when compared to Northern Virginia, where the housing stock on the market has nearly doubled from a year ago.

The total number of units sold was up slightly from a year ago in Montgomery County and the average sale price as a percentage of list price was unchanged. About 68 percent of homes are selling in fewer than 30 days and less than 5 percent are taking more than three months to sell.

In Potomac there are currently 198 homes on the market, up 15 percent from the same time last year. In September, 33 homes sold for more than the asking price and homes sold in an average of 27, just under the average for the county, according to an on-line report by Realtor Charlotte Walker of Coldwell Banker Residential Brokerage in Potomac.

SO WHAT’S going on? The statistics, if they reflect anything more than normal market variance, signal a return to normalcy, said Bob Moorman, manager of the Potomac office of W.C. & A.N. Miller Realtors.

“When you’re going from a real aggressive market like the one we were in where you hang a sign out there and it sells the next day,” it’s easy to jump to dire predictions about a bursting real estate bubble when things slow, Moorman said. “I don’t think there’s a bubble here. There are those that would disagree with me, but I don’t.”

“We got so heated and so used to the frenzy that now when things are normal everybody starts to panic a little bit,” said Andrea Alderdice, a Realtor in Miller’s Bethesda office.

Moorman said market conditions in the area are still strong and still favor the seller, since demand continues to exceed supply. He pointed to the area’s healthy economy, low unemployment, and ongoing influx of federal workers, especially in growing departments like Homeland Security.

At the same time, interest rates are incredibly low—low enough for someone earning less than $50,000 a year to buy a $300,000 house.

As a result, low-end properties are selling “very, very well” Moorman said while sales of the most expensive properties have slowed some but not tremendously.

“The upper brackets, over $1 million, they’re sitting a little bit longer but they’re still selling,” Alderdice said. “We’re still seeing multiple offers on properties. We’re not seeing 17. We’re seeing 3 or 4.”

Alderdice said she thought a slight cooling of an extremely hot market is beneficial.

“It’s actually really good for everybody,” she said. “It’s easier for buyers to make educated decisions and that in turn protects the seller.”