There’s good news and bad news for springtime home shoppers — and sellers — this year.
The good news: Mortgage rates recently dipped, making housing payments a little more affordable. More good news: The number of single-family homes for sale in the Washington region rose by 5.6 percent in February compared with February 2018, according to data from Bright MLS.
Now for the bad news for sellers: The number of homes that sold in the region declined by 5.7 percent in February compared with February 2018, which represents the seventh consecutive month of fewer sales. That slower pace of sales may mean that buyers have a little more time to look for properties. Sellers who are aware of the slowdown but still want to sell and move on may be a little more willing to negotiate, too.
But the reasons for the slowdown in sales are not so great for buyers: Years of limited numbers of homes for sale which, even with the recent increase in listings, still won’t meet buyer demand. And high housing prices reduce affordability for many prospective buyers.
The median sales price rose 4.2 percent in the metro area in February 2019 compared with February 2018 to $427,000. But in the competitive housing market in the District, prices rose by 10.6 percent in February compared with the previous year to $589,000.
The D.C. region remains tipped in favor of sellers, but each local market varies in the number of homes for sale and the number of buyers looking in that area. While the number of detached single-family homes for sale increased, the number of townhouses for sale declined by 2.2 percent and the number of condos for sale declined by 21 percent when comparing February 2019 with February 2018. In many cases, townhouses and condos offer a more affordable alternative to a detached house, so buyers looking for those property types will still likely face competition even as overall listings increase.
Depending on the neighborhood, price range and property type you’re looking at, you may have a little breathing room this spring to take your time to find your ideal home. But when you do find it, you need to be prepared to make an offer quickly. To get ready:
• Get a fully documented preapproval for a mortgage: While a quick consultation with a lender can give you an idea of your price range, to be certain that you’ll have your financing when you need it, you should request a loan preapproval. You can work with your chosen lender and provide full documentation of your income, assets and all other required paperwork to start the loan process.
The final loan approval will be contingent upon an appraisal once you have a signed purchase agreement, but you’ll have the credit qualification part of the approval in place. That can make a huge difference if you end up competing with other buyers for the home you want.
• Prepare a financial statement for the sellers: Besides price, the most important thing for sellers is to feel confident that the buyers will be able to complete the sale. Sellers worry they might take their home off the market and then be forced to relist it after a failed contract. A fully underwritten loan is the gold standard, but a financial statement showing your income and your sources for the deposit and down payment can strengthen your offer.
• Work with an experienced real estate agent: A well-connected agent with local market knowledge can help you find neighborhoods and homes that you might miss on your own. A great agent can also help you recognize good value or overpriced properties.
• Round up your offer: That sounds counter-intuitive for a buyer looking for the best deal, but if you offer $400,000 rather than $399,999, it’s more enticing to a seller as it just sounds like you are offering so much more.
Expect to spend a lot of time looking for properties online and in person this spring. The more you see, the more you’ll understand what your budget can buy and which features are the most important to you.
Jon Coile, chairman of Rockville-based multiple-listing service Bright MLS (formerly MRIS), writes occasional commentary on the Washington area housing market.