Thursday, 21 September 2017

Real Estate Cesspool Or Red-Hot Market?

Written by Jaymi Naciri Posted On Wednesday, 12 April 2017 19:18
Real Estate Cesspool Or Red-Hot Market? WashingtonPost.com

A look at Washington DC homes in the era of Trump

Politicians descending on Washington, DC at the start of a new administration is nothing new. But between who's moving in, where they're going, what they're snatching up, and how the neighbors feel about it, there's never been more attention on the area's real estate market.

The real estate conversation in DC hasn't been without its drama. Neighbors in the decidedly liberal Chevy Chase neighborhood where Mike Pence and family rented a home while their VP digs at the U.S. Naval Observatory were being renovated hung rainbow flags in November in solidarity with LGBTQ rights. Two nights before the inaugural balls, hundreds of protesters took to the streets outside the Vice President's home, throwing a pro-LGBTQ demonstration disguised as a raucous dance party in opposition to "Pence's anti-gay reputation," said CBS News.

Earlier this month, the demonstration moved to Ivanka Trump's new DC home in the tony Kalorama neighborhood, with hundreds of protestors marching/dancing for climate change outside her rented residence.

So how is the Washington, DC real estate market holding up under all this exciting scrutiny? Pretty well, thanks.

Last month, home prices in the area hit their "highest March median sales price on record," said Real Estate Business Intelligence. "March 2017's median sales price of $420,00 was up 5.3% or $21,000 compared to last year. Sales volume across the DC Metro area was nearly $2.3 billion, up 26.7% from last March. Closed sales of 4,450 were up 18.5% compared to last year.  It was also the highest March level in a decade and easily exceeding the 3,755 sales recorded last March."

Hot neighborhoods

Activity in the upscale neighborhoods inhabited by some of the more high-profile folks in the Trump administration have hardly been negatively affected, protests notwithstanding. At $5.5 million, this Beaux Arts manse was the most expensive home sold in DC in March and is in the same Kalorama neighborhood that Ivanka Trump and Jared Kushner and the Obamas now call home. This $2.5 million stone house also made the "most expensive" list for the month.

Secretary of State Rex Tillerson also chose Kalorama, purchasing a $5.6 Colonial Revival home earlier this year. Amazon founder and Washington Post owner Jeff Bezos bought the biggest home in Washington at 27,000 square feet - and one of its priciest, at $23 million - in Kalorama in January. A former textile museum, the property was reportedly sold for $1 million over asking price in an all-cash purchase by Bezos.

So what's driving the luxury market? All the usual suspects: location, desirability, job prospects. But it's that last part that is really making things interesting.

"In Washington DC agents are poised for a pick-up in business as buyers who held off moving homes during an uncertain election year now enter the market and as Trump's political appointees stream into the capital, making big-ticket purchases," said Financial Times. "Michael Rankin, managing partner at TTR Sotheby's International Realty based in the US capital, says DC's market strengthens slightly whenever there is a major change in the administration and new public servants move in to take office. This year, however, that churn has been heightened by the president's choice of political outsiders for top jobs and the financial might of many of these appointments, including former Goldman Sachs banker Steven Mnuchin and billionaire investor Wilbur Ross."

Mnuchin bought a $12.6 million house in DC's Massachusetts Avenue Heights neighborhood in February. Ross, President Trump's Commerce Secretary, bought a $12 million home in the same neighborhood, on a street aptly known in the area as "Billionaire's Row."


cottages-gardens.com

Inventory

The one thing that could slow the local market down: a lack of inventory. Not only are there fewer homes to buy, but, "Low inventory in the Washington area housing market continues to push up the average sale price of a home," said the Washington Post, making it difficult for those below the 1% to afford anything in the area.

"Housing inventory nationwide has been greatly constrained over the past two years, and hit a new low during the first quarter of 2017," said Urban Turf. "The report finds that U.S. inventory has fallen for eight consecutive quarters - and the dearth of supply is most-pronounced in markets where home values have experienced the strongest recovery," like Washington, DC. Inventory in the area saw a "11.3 percent drop" in the time between "the first quarter of 2016 and the first quarter of this year," which is more than double "the 5.1 percent year-over-year drop nationwide."

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