Megan McArdle, the business and economics editor for The Atlantic, wrote on the magazine’s blog today, “Why Are There No Houses for Sale in DC?” The pieces opens with:
We’ve been dipping our toes into the DC housing market recently, but after this weekend, I think I’m just about ready to give up. Anything that comes on the market at a decent price is snapped up almost immediately–by my count, mean time from listing to contract is under seven days. The only things that stay on the market long enough to look at fall into one of two categories:
1. The owner bought the house between 2004 and 2007, and wants to get their money back out, hopefully with a little profit . . . and has therefore priced their home at least $100,000 above what the market will bear.
2. The house has been rented, and the tenants, familiar with their copious rights under DC housing law, are essentially refusing to allow the house to be shown.
This is not to suggest that the D.C. market is booming, and it probably has the “shadow foreclosure inventory” that most markets have lurking:
I spent the weekend in long conversations about why this might be with our real estate agent, and a friend who develops property in DC. There’s a big “shadow inventory” of houses in late-stage delinquency or foreclosure, particularly in the areas where we want to buy. Why can’t we find anything?
In part, because that shadow inventory isn’t coming on the market. There are two components to this, one DC-specific, one not. The specific part is the aforementioned tenant laws, which make New York’s arcane housing court system look like a bastion of pro-landlord sentiment. The only way to break a lease is to be a single-family owner who wants to take occupancy. The bank has to let the tenant’s lease run before they are evicted, as well as give them ninety days notice of the intent to vacate the property. Given the difficulties of selling a house that cannot be shown, a lot of banks are choosing to do just that. Others are putting it on the market and then finding that, surprise! they somehow never can schedule a showing. Yet the banks are understandably unwilling to drag the tenants into court, which is very time consuming, and a huge burden on already overwhelmed administration.
But she points out what most already know–that D.C., like in most aspects of each recession, fares better than other cities in terms of housing values. It is nice to see the added mention of Northeast D.C.–since Eckington (along with H Street) is obviously one of these “huge swathes”:
Meanwhile, DC is one of the relatively fortunate areas in this recession. Our unemployment rate is high, but it hasn’t shot up the way it has in other areas, pushing previously solid homeowners to the brink of foreclosure. Meanwhile, the expansion of government is attracting ever more young professionals to the area. The combination means a lot of money looking to buy very few houses.
It’s not totally unreasonable to think that prices will go up in DC, eventually; huge swathes of Northwest and incresingly, Northeast are gentrifying at a pace faster than anything I’ve ever seen–and before I moved here, I was a lifelong New Yorker. But even here, that shadow inventory means it’s not going to happen for a few years.
Bottom line: if you are a home owner, it’s generally better to be in D.C. than other markets, and for those who have plotted down in transitional areas such as Eckington, your area’s progress has not gone unnoticed.