Home Sales Will Bloom in D.C. This Spring

Spring 2016 is looking like a “dream season” for selling your home in the nation’s capital, and there are compelling reasons for this forecast. The city’s housing market is booming, and it’s much stronger than it was even four years ago.

What makes Washington D.C. unique? First, a limited housing inventory will play off recent high demand. Numbers leading into spring are also promising: 2015 was strong for the industry, with Washington, D.C. home sales rising 9.5 percent over the previous year. Market speculation will drive more listings, and new home construction will fuel the supply, adding 10 percent to the offerings.

You can expect better gains — working from a 2 percent rise in 2015 median sales prices — and a quicker sale, with the average days on the market sitting at 40 days.

Nationwide Housing Market Is Trending Up

Nationwide trends support these strong indicators. Industry experts predict that the 2016 housing market will be the hottest since 2006, thanks to a stronger economy and lower unemployment.

With rising employment, purchasing power is higher and savings accounts are deeper. More buyers can afford larger down payments for their first-choice homes, and they’ll find easier approval for mortgages. First-time homebuyers will also get help from Freddie Mac and Fannie Mae to turn their dreams into realities.

Despite the stronger economy, interest rates will be a different beast. Rates have been so low for so long that speculation points to rates rising in 2016. Yet this isn’t cause for alarm: Rates will climb slowly over the next 10 months, and while they’ve already inched higher, these increments will have little impact. Growth may be affected, but at the rates we may see soon, the Federal Reserve’s timing might be near perfect.

Breaking Down Buyers

For sellers, this is going to be a dream season. A large pool of qualified buyers will take advantage of the market as soon as possible. These buyers are cash-flushed and pre-approved. So who are these potential buyers driving the market? We’ll see three generations of homebuyers active this spring:

• Older Millennials, fueled by promising and ever-growing linear salaries, are now preparing for the next step of building families. These buyers are just entering the market for single-family homes that offer more space, and while younger Millennials are moving into major metropolitan areas, this group is looking to distance themselves from the crowd.

• Generation X’ers are recovering from the economic slump. These buyers have been slowly and silently rebuilding credit, accumulating savings, and living well within their means in response to the financially crippling storm of six years past. Ready to move up, these buyers will be active in the market, thanks to better mortgage rates and beefier savings.
  

• Baby Boomers are anticipating retirement and looking to downsize. Many will be trading their current homes for more affordable housing with impending fixed-income futures.

This phenomenon occurs across the board — all three groups drive the national market. According to an aforementioned source, Washington D.C. offers further advantages, with a higher housing price index at $300,000, compared to the national average of $190,000. Washington D.C. also has a stronger ratio of housing prices to median household incomes, at an index of 3.9 to the 3.3 nationwide.

Looking to List? Consider This

Before taking the plunge, examine these key factors during the listing and sales process:

1. 2016 is a buyer’s market. Remember, this season is going to be about buyers who are both high in quantity and in quality. Buyers will lock in low-interest rates as quickly as possible, which means:

2. Open season is coming early. The selling season is going to start earlier than usual. If you haven’t started preparing to sell your home, you have a short window to hit the market before it gets into full swing.

3. Competition is fierce. You aren’t the only one on the block — more listings will translate into high-pressure competition, which means housing prices will trend low to stay attractive. Be flexible and open to all offers because buyers will have more options.

4. Agents are key. If this is your first time selling a home, get an agent. Licensed real estate agents know more about the market than you do — it’s their jobs, after all. Using a realtor to list property will not only maximize your chance to reel in a higher offer, but it will also take a ton of stress from your plate. The commission is worth it.

5. You can’t control everything. Both the marketplace and the competition are out of your hands. However, you do control the listing price and the condition of your property. Your agent will help you set an appropriate listing price, but the condition of your home is completely in your hands. First impressions are key, and most first-time buyers don’t want to spend considerable cash repairing the mess you’re leaving behind.

For Washington, D.C. home sellers, the aspects are all favorable — prices will be strong, and houses won’t stay on the market for long. Be prepared for the spring season, and keep in mind what buyers are looking at. Use the time you have to make your house picture-perfect, and you’ll lead the field to the finish line.