Archive for the 'Washington DC' Category

In the past several months in the Washington area, most homeowners who have sold their houses because they are relocating or preventing their homes from becoming foreclosed houses have sold them at big losses.

The Bloomers bought their home in Silver Spring for $525,000 in 2005, but sold them at a loss of over $100,000 despite remodeling the kitchen and replacing the windows and the roof. Tammy Bloomer said it is unfortunate that they bought their home during the housing boom. They are moving to Chicago to pursue a job opportunity.

The Thompsons were also forced to sell their home at a losing price. They purchased their house in 2007 for $564,000. This week, they are selling it for only $372,000 after Mr. Thompson has lost his job.

According to Washington Post analysts, 62 percent of home sellers in the Washington area sold their homes in the first quarter for much less than the amount they paid to buy it in 2000, largely because of the bargain prices of foreclosed properties in the region.

Real estate analysts contend that a correction is needed in Washington’s housing market despite the painful effect it has on homeowners selling their homes. They said the Washington region had one of the steepest increases in house prices in the country during the boom; hence, the prices must be pulled down in order to put prices on a more affordable level where both buyer and seller can negotiate fairly.

Realtors in the Washington region could not say certainly when prices would bottom out. Real estate analyst Delta Associates and the Washington Multiple Listing Service predict a bottoming out in late 2009 for central communities and 2011 for suburban areas. But they warned that additional foreclosed properties from banks could bloat the housing supply.

Nicolas P. Retsinas, head of Harvard University’s housing studies center, also affirmed the contention that the Washington housing market will not recover as long as foreclosed properties continue to pull down prices. He explained that the norm in a stable housing market is the prevalence of transactions between willing sellers and buyers, and not transactions involving sellers forced to accept buyers’ low prices.

The suburbs of Washington suffered more greatly than the central areas because a lot of suburban home buyers took out subprime loans. Most of them defaulted in 2007, leading to large numbers of foreclosed properties in the outlying areas of Washington.