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Housing Market Calms

The condominium market is shifting to favor the buyer.

After Alexandria housing prices exploded 114 percent over the last seven years, the city’s housing market is finally moderating, brokers say.

Sometimes in recent years 10 to 12 families have made offers for homes, said Maxine McLeod Miller, managing broker at Prudential Carruthers Realtors.

Now the market has shifted and one home seller is offering a MINI Cooper automobile to whomever buys his home, said Dave Hawkins, managing broker for McEnearney Associates.

“Buyers are much more successful in getting what they want as compared to last year, where it seemed they were sacrificing so much just to get a home that was not a perfect home,” said Michael Turk, managing broker with Weichert Realtors.

Dick McCaffrey, managing broker of Old Town Office of Re/Max Allegiance, agreed. Regarding the housing market he said, “I think it’s leveling. I think there are fewer buyers willing to pull the trigger ... because they’re afraid they’re buying at the top.”

The median sale price of Alexandria residences actually went down 18 percent from early 1999 to early 2001, according to Metropolitan Regional Information Systems information. However, from early 2001 to early this year home prices then gained a remarkable 180 percent.

When brokers were asked about the decline from 1999 to 2001, most were surprised to learn of it. Fewer new homes entering the market in 2001 as compared to 1999 may have led the average sale price to go down, Turk said. New homes generally sell for higher prices than do old homes, he explained.

From 1999 to 2001 the city’s assessments on existing property increased 14 percent.

The average assessed value for an existing residential property in Alexandria increased 178 percent from 1999 to 2006, according to memos prepared by the city managers. In 1999 the average assessed value for an Alexandria residential property was $182,944. In 2006 it was $526,852 based on 2005 sales prices .

By comparison the average Alexandria home price has increased 103 percent from early 1999 (first three months)to early 2006(first three months).

In Alexandria, houses are assessed at 100 percent of fair market value each year as required by state law. Their assessment are made for Jan. 1 of each year. The assessment takes into account both the value of the physical building and of the land on which it sits.

The Alexandria Department of Real Estate Assessments examines sales of similar homes in the vicinity of the property to determine the property’s assessed value. It looks at sale prices over the previous year (2005) to determine the assessed value.

When asked about the difference between the assessed value increase and the sale price increase from 1999 to 2006, Alexandria’s director of real estate assessments Cindy Smith Page pointed out there are variations in what is put on sale from season to season Looking at sales figures for just three months of a year (January through March 2006) is inadequate to ensure an accurate view of a housing market, Page said.

ALEXANDRIA BROKERS generally agreed on the factors behind the surge in residential prices from 1999 until recently. Many pointed to historically low interest rates and a robust Washington-area job market. Some also mentioned the increased participation of investors in the job market in recent years.

All these things combined to create a high demand for houses for sale, they said.

“Both Arlington and Alexandria have location with the big ‘L’,” McCaffrey said. By being close to Washington, D.C. they are viewed as first choice areas to live by many potential home buyers, he said. This has helped drive up prices in the areas.

Cameron Station, Old Town, and Del Ray are the neighborhoods that have seen the biggest increases in prices, said Michael Lekas, realtor with Coldwell Banker Residential.

In the last six or seven years Del Ray has been the hottest neighborhood, Hawkins agreed.

Over the last year the housing market has moderated considerably, realtors said . The market for condominiums, in particular, has shifted toward the buyer, several said.

On March 30, 2005 there were 30 single family detached Alexandria homes on the market, Turk reported. On March 30 this year there were 42 single family detached Alexandria homes on the market.

The increase in condominiums on the market has been much more marked. Whereas there were 73 Alexandria condominiums on the market on March 30, 2005, there were 459 condominiums on the market this March 30.

Many of the real estate investors who got into the market several years ago are selling, Turk said. These investors generally bought condominiums rather than single-family homes.

The housing market is now more “balanced,” Miller said. Buyers can now go home and sleep on a decision. If they did that two years ago, five contracts would have been put on the property by the time they decided to put their own down, she said.

Sometimes sellers will offer incentives for the sale of their home, like the MINI Cooper, Hawkins said. Other times, buyers will still end up bidding up prices beyond the asking price. However, this is more rare than it was in recent years, she said.

In the coming year or two Alexandria real estate prices will rise at a more moderate 3 to 4 percent rate, McCaffrey predicted.