From The Frederick News-Post:
While a report out last week showed that June’s median housing prices in the Washington region were the highest ever, another new report suggests that the area’s housing market may face some volatile factors in the coming years.
The median sales price for the Washington metro area in June was $471,000, up $16,000 from a year ago and $6,000 from last month, according to data provided by Bright MLS, a service that provides data from about 85,000 real estate agents in the Mid-Atlantic region.
The high prices are partly a function of more people looking to buy than there are people looking to sell, said Adam Lobst of Bright MLS.
“It’s really that lack of inventory, that is really the issue,” he said.
While the sales volume across the Washington region was more than $3.3 billion, that was 2.8 percent less than last year, according to the group’s data.
The number of closed sales and pending sales were also down compared to 2017, as was the number of new listings.
There were 7,346 new listings in June in the region, down 6.4 percent from last year.
Bright MLS defines the Washington region as Montgomery and Prince George’s counties in Maryland, Washington, D.C., and Arlington and Fairfax counties as well as the cities of Alexandria, Fairfax, and Falls Church in Virginia.
Lobst said most real estate activity happens in the summer months, since people are more willing to buy or sell their homes while their kids aren’t in school.
But predicting whether trends in real estate will continue is a tricky pastime.
“It’s kind of like trying to drive a car while looking in the rearview mirror the whole time,” Lobst said.
But a new report from the Stephen Fuller Institute at Virginia’s George Mason University suggests that the Washington region’s real estate market may experience some uncertainty in coming years as baby boomers look to move out of homes that no longer fit their needs.
More than 41 percent of home owners in the Near-In Washington region between 2014 and 2016 were between the ages of 52 and 70, up from 30 percent in 2000, according to the report.
Also, more than 273,540 homes in the region that were headed by someone aged 50 or older had at least two more bedrooms than people who lived there.
The Near-In region includes Frederick, Montgomery, and Prince George’s counties; the District of Columbia; Fairfax, Arlington, and Prince William counties in Virginia, along with the cities of Alexandria, Falls Church, Fairfax, Manassas, and Manassas Park.
Some homes in the region haven’t been on the market in more than 20 years, said Jeannette Chapman, deputy director and senior research associate at the Fuller Institute.
Many baby boomers in the area “bought when they came here, and they stayed,” she said.
While a sell-off of baby boomers looking to downsize once their children have left home has been predicted for several years, Chapman said she expects that it will happen in the next five to 10 years. “It’s kind of hard to pinpoint when it’s going to happen,” she said.
And it’s not as if every baby boomer home owner would have to sell to have an impact on the market.
“If even three percent of owners aged 50+ with two or more extra bedrooms decided to sell, an additional 8,210 homes would be put on the market, the equivalent of 12.4 percent of all the homes sold in the Near-In Washington region in 2017,” the Fuller report said.
According to the report, more than 20 percent of the homes in several Frederick County zip codes have been owned since 1989 or earlier.
They include the 21770 zip code near Monrovia, with 30 percent, and the 21788 zip code in the Thurmont area.
Patrick McLister, a Frederick attorney whose firm handles a number of real estate issues, said downsizing is definitely happening in Frederick County, as baby boomers look to downsize, even as they often stay in the county.
The standard colonial with three to four bedrooms upstairs isn’t really feasible for a lot of baby boomers, he said.
If a home can be renovated to better fit the owners’ needs, they may stay, or otherwise look to buy something with a master bedroom on the first floor, he said.
“I think people like their homes, they’re just trying to make them more functional for their life,” he said.
The change could increase listings of homes with several upstairs bedrooms that will be taken over by younger buyers looking for houses that will fit their young families.
Younger buyers are willing to consider an older home, and are focused on issues such as schools, the safety of an area, and the number of bedrooms, he said.
“They don’t mind having an older home if it fits their needs,” McLister said.