For years I have believed that parts of NW DC, Bethesda and Chevy Chase would be sheltered from downward, nationwide real estate price trends. Leafy neighborhoods, good schools, close to downtown – these things are always in demand in a growing city. Besides, how could we go from frenzied auction-style offers where people had to waive inspections and sell their first-born children just to get ANY house, to a price crash? At most, I could envision a leveling off of prices in these neighborhoods.
Prices Up in Bethesda, Chevy Chase – Falling in Silver Spring
So far my feeling has not been disproved. Advertised price reductions don’t mean that overall prices are falling – just that some greedy homeowner’s expectations are out of line. But …
Below is a trends comparison for Bethesda, Chevy Chase and Silver Spring, using Altos Research data. It is revealing, even if you consider Silver Spring to be a separate market. I remember asking a real estate agent about this kind of comparison last year and she was cagey – said it was “hard to come by.”
Median sales prices for single family homes have indeed continued to rise in Bethesda and Chevy Chase, but other indicators are showing a change in these markets. One major red flag: a more than doubling of average days on the market over the last six months. No more stampedes at the open houses!!! How refreshing. For those who appreciate the more reasonable price tags of Silver Spring, you should note that prices there have already started dropping.
This is what I found for single family homes, as of January 20, 2008.
Bethesda – $1.2 million, rising from about $0.9 million in June. Could this be correct? I am going to check back with Altos Research just to be sure.
Chevy Chase – $1.4 million, rising from about $1.2 in June. Prices actually fell in the summer and then recovered.
Silver Spring – $463,000, down from a high of about $560,000 last Spring. Prices fell mostly before October and have been more level since then.
Buyer’s or Seller’s Market?
Altos Research has created a Housing Market Conditions index based on supply and demand to estimate whether each area is a buyer’s or seller’s market. All three neighborhoods are now considered buyer’s markets but this is only recent in Bethesda.
Bethesda – Until 3 months ago it was considered a seller’s market. No more.
Chevy Chase – Has been a buyer’s market for longer but it fluctuates and does not seem as weighted towards buyers as in Bethesda.
Silver Spring – Has been a clear buyer’s market since the summer.
How Long on the Market?
Bethesda – Average 80 days, compared to about 35 in June 2007.
Chevy Chase – Average 65 days, with a steady rise from less than 20 days in June 2007.
Silver Spring – Average of 95 days, compared to 35-40 in June 2007.
Number of Homes for Sale (on Jan. 20)
Bethesda – Over 230. Down from September when there were over 300 at times. I think this is typical for winter time. But compare this to only about 100 on the market last Spring. So – is the market stronger than last Spring or are people over-extended and selling out?
Chevy Chase – Over 65. The numbers peaked at about 100 properties on sale at any one time over last summer, dropping since then. Last May there were about 75 on sale.
Silver Spring – Over 970. Following the Bethesda pattern, in September there were about 1260 and about 250 last May.
So what does all this mean? No one can time when the market will bottom out. If you’re a buyer, at least you can wait around until you really find that dream house. Visiting open houses is no longer a blood sport! And low-ball offers may actually receive consideration as Bethesda and Chevy Chase owners get more nervous about this new situation.