With foreclosures and declining home prices, news on the real estate market isn’t good. True, our local real estate market is under pressure; but Montgomery County is much healthier than markets in California, Las Vegas and Florida that we always hear about. Foreclosures in our area are mostly concentrated in two areas: entry-level housing, and areas that experienced a lot of new construction in the early 2000s.
Right now, about 50% of all available homes in Montgomery County are priced under $400,000 in the zip codes of Silver Spring, Gaithersburg and Germantown. As price appreciation stopped, marginal buyers with riskier loans drove-up foreclosure rates which pressured prices lower for all owners in this segment. Unlike other parts of the country, however, homes are still selling here with over 2,200 homes sold in 2008. With 6 to 8.5 months’ available inventory, there’s a lot available – but buyers are still buying.
Only a few areas in the County saw big increases in inventory from new construction. In Clarksburg for example, home builders added a flood of new homes starting around 2002. Fueled by fast appreciation and significant investor activity, demand for new construction went up even more. When appreciation stopped, inventory shot up and values started heading down. The result today – about a years’ worth of inventory is on the market with approximately 130 homes available. At least 1/3 are bank-owned or distress sales, 1/3 are new construction, and about 1/3 are typical home resales. Again, Clarksburg is the exception here. As a whole, our County has not recently added significant new inventory.
So what does all this mean if you have to sell a home in today’s market? It’s easy to be anxious if you need to sell in the coming months, but know that homes are selling here and buyers are getting loans. Still, selling a home is hard work and it can take longer to find your buyer. You must understand your local market segment and how to position your home in it. For market segments with a large number of foreclosures, home sellers must price their home aggressively. In segments with stronger demand, sellers can stick with a premium price provided they maintain good showing activity and positive feedback. In all cases, your home must show well to stand out. With so much selection, buyers are more selective than ever.
If you are planning a sale in the coming months, give us a call and we can review activity for your specific area and recommend cost-effective improvements if needed.