DC Real Estate is “Healthiest Markets” In 2011: Why It Doesn’t Matter?

Washington DC Is On a Real Role? Or just “media smoke and mirrors”…

Hot off the presses, a Forbes Article declared Washington DC the “US city to see the most appreciation in 2011”. From the recent S&P Case/Schiller index, to DC’s recent International real estate investment attraction , it’s been a great week for DC real estate in the press….so what?

Let me clarify: if agents tell you “it’s a great time to buy in the Washington DC”, they better qualify that assertion….Like “what DC Neighborhoods or enclaves”….”what kind of properties are value buys” 🙂

For those who have followed either Gretchen or me for the last 3+ years (on blog, that is!), you know we take these National “Mega-tropoles” or city real estate market market reports with a grain of salt.

The Reason Why?  Real estate can only be responsibly measured by examining micro-markets:

 

Georgetown DC Townhomes
Georgetown DC Townhomes is an example of a micro-market, one that has fared well through the “melt-down”

Read The Micro-Market Defined & How it Pertains To Washington DC Real Estate


Gretchen Koitz (Nov 30th -2007) >> Greater Bethesda & NW DC Condos Needing To Go Big

Gretchen’s Quote This Week: AOL Real Estate >> “White House Real Estate Value Drops

The two Penthouse Condos at The Edgemoor at Arlington, in Downtown Bethesda — at over 2500 sq. ft. — ares examples of the “micro-market”.

All caught up? 🙂  Then back to Clear Capital, the creators of the list – who have a monthly “Clear Capital Home Index” — Just another real estate research firm making news for the sake of news in my opinion.

Forbes didn’t go into great detail about the criteria for the rankings. Just that they took major economic factors into account:

  • Unemployment rates
  • Foreclosure rates
  • Size of bank-owned inventory.

The List: Washington DC + Mass Generalization..The Good and The Bad 10 Markets On The Rise In 2011:

 

1. Washington, DC: 6.5% price increase y/y
2. Houston, TX: 3.6% price increase y/y
3. Honolulu, HI: 3.4% price increase y/y
4. Memphis, TN: 3.2% price increase y/y
5. Columbus, OH: 2.1% price increase y/y
6. Dallas, TX: 1.4% price increase y/y
7. New York, NY: 1.3% price increase y/y
8. Birmingham, AL: 0.9% price increase y/y
9. Pittsburgh, PA: 0.8% price increase y/y
10. New Orleans, LA: 0.5% price increase y/y

10 Markets Said “Will Fall The Most In 2011”:

1. Virginia Beach, VA: 12.8% price decrease y/y
2. New Haven, CT: 11.9% price decrease y/y
3. Tucson, AZ: 11.9% price decrease y/y
4. Dayton, OH: 11.7% price decrease y/y
5. Jacksonville, FL: 10.5% price decrease y/y
6. Phoenix, AZ: 9.4% price decrease y/y
7. San Francisco, CA: 9.3% price decrease y/y
8. Detroit, MI: 7.7% price decrease y/y
9. Oklahoma City, OK: 7.6% price decrease y/y
10. Tampa, FL: 7.4% price decrease y/y

What This List Means For Those Looking to Buy in Washington DC…

It depends…recent positive press (especially International Investment) should spell out a healthier 2011…but where in DC will it increase activity? What kind of properties will be in more demand…and in what neighborhoods…that’s a micro-market.

…I’m not trying rain on anybody’s parade. Washington DC is “the” most stable real estate market in the country. So go out and buy — with me :-). But don’t let research pretending to be research make your decision about when you want to buy. I said this when DC was getting bad press too, so I get to say it now 🙂

Another tip: ask an honest authority about areas, neighborhoods, property types (yes there are Realtors who educate before they think of “sell”), and then make your assessment…

My Predictions (Educated Ones!) for DC Neighborhoods &  Enclave of Greatest Appreciation:

Many neighborhoods in Northwest Washington DC that have been holding relatively strong (Georgetown, Dupont, Kalorama, Logan Circle, Wooldey Park) will lead the way. If you want me to drill down even further, let me know in the comments or contact me, of course…(sorry, I’m getting tired!).

Location + Housing types?: Too Easy!

You’ll see the highest appreciation in NW DC Urban village properties* that either:
1. Have elevators
2. Have a master bedroom on the first floor or
3. Are large condos (2500 sq. ft+)
4. Any comnation there of

There’s a demand (mostly baby boomers ready to pay), but there’s little supply.
*Urban villages include most of the areas I identified above — cities within the city. Most tend grow “around” DC Metro stations.

Conclusions on Washington DC & Market Reports:

It’s good to be number one to stimulate excitement and activity but It’s irresponsible for the media and “real estate wonks” to gauge “housing health” using such a wide lens — it’s inherently inaccurate.

An Ironic  Quote…

“There really is this segmentation of these markets occurring where the one-size-fits-all national level numbers to represent all numbers really isn’t valid anymore,”

– Alex Villacorta, senior statistician at Clear Capitol. 🙂

Alex is right and wrong…or he’s kinda on the right path. There has always been need for segmentation of large markets (Metropolises). But that same “need” applies to even smaller areas (zip codes demand more analysis). There’s never been a place for “the one-size-fits all model”…in bad times, and good 🙂

Thoughts?