The Atlantic – “Why Are There No Houses for Sale in DC?”

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.

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4 thoughts on “The Atlantic – “Why Are There No Houses for Sale in DC?”

  1. i’m guessing she didn’t look for houses in trinidad. there are plenty for sale here, at prices under $300K, that do not have renters in them, are not divided into multiple units, and are close to transportation, nightlife, etc.

  2. Well, I think the issue is not that there aren’t a ton of houses for sale, just not the type you want, in the neighborhood you want it to be in.

    A quick view at Redfin shows there are a lot of houses in the 550K to 750K range for sale in places like U Street, Columbia heights and Capital Hill that have been on the market for a long time (atleast a few months) and/or have had their prices reduced.

    People just have to admit that they can’t buy in desirable places for bargain basement prices, unless you are willing to take a place with tenants or that needs lots of work. Thats the way it has always been, and the way it will always be.

    I am curious as to the places the author was looking and the price range she is looking in?

  3. Good gravy hyperbole. There are houses. Just not the ones she wants. Where she wants. For how much she wants. Some owners bought a fixer upper between 2004-2007, fixed it up and want to make a profit. So what. Also she needs to discover the joy of haggling. And maybe a kickass contractor should she go with something that isn’t in ‘move in’ condition.

  4. She’s right — it’s hard to buy a nice house in DC now, regardless of what you’re looking for. Fixer uppers go off the market as quickly as nice new homes — sometimes quicker. Inventory is down compared with last year. Competition is fierce. I don’t know why anyone is diminishing her problems.

    To say that a listing that’s been languishing on the market for months is a “good buy” is naive. If it were a good buy, it would have been bought. Haggling may not work — 1 in 4 homes are underwater nowadays.

    She’s talking about problems unique to this housing market, which were created by historic, once-in-a-century economic conditions. Actual buyers today (as opposed to MLS hounds) have had the same experience she has.

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