The economy is on everyone’s minds these days. Many are wondering whether things will turn around in 2011. I’m thinking about something more specific than that: What will the Washington-area real estate market look like next year?
This year has been very unusual, with the federal tax credit boosting spring sales and everything sputtering along after that. Here at the end of 2010, we have falling sales and a backlog of unsold homes that could dampen the market early next year.
What will next year be like? Will sellers or buyers have the advantage, or will things be roughly balanced, as they have been since summer?
“Real estate tracks with consumer confidence. So if you want to predict the future, you look at consumer confidence,” says Ruth Dickie, who retired a few weeks ago as manager of Long and Foster’s Bethesda Gateway office.
“When confidence is going up the curve, real estate tends to do well. However, when you look at how they get those consumer-confidence numbers, it makes you a little less confident in them. The numbers can be fuzzy,” Mrs. Dickie says. “Still, for our purposes in real estate, tracking consumer confidence can give a home seller some insight into timing and pricing the sale of their home.”
If a potential seller is able to wait a while to put that sign in the yard, the spring market usually is better than wintertime. The number of buyers increases in March, April and May, and the increase in buyer competition often causes an increase in home prices during the spring.
Of course, if the inventory climbs faster than sales figures, there won’t be enough buyer competition to pushes prices up.
The poor economy is partially to blame for the inventory of unsold homes.
“Five years ago, the baby boomers were buying second and third homes,” Mrs. Dickie says. “But right now, everyone is fearful of taking on long-term debt, so those baby boomers are staying put.”
Until the economy improves enough to really boost consumer confidence, we won’t see a significant increase in the kind of “optional” home purchases that helped fuel the sales boom of 2003 through 2005.
- Chris Sicks
Send e-mail to csicks@gmail.com.
The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria, Va.; and the District.
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