Washington, D.C. Metro Area Real Estate Market Review 3rd Quarter 2008 We are currently experiencing one of our country’s worst financial periods. In a nutshell, this turn of events actually began several years ago when the real estate market could not sustain the double digit growth it had experienced for years. And as sub-prime mortgages started adjusting, homeowners couldn’t afford their homes anymore and were unable to refinance or sell; therefore, many homes ended up in foreclosure. As a result, we now have the financial “bail-out”, the stock market crash and the credit crunch. So, how is this affecting the real estate market? The primary issue is credit. Understandably, the banks have become tighter when giving out home mortgages. They require far more documentation and in most cases more down payment. The days of 95% financing are behind us ... for now. FHA has increased its limits and that is helpful but in our area, very few homes qualify for FHA loans. Therefore, even if we have an interested party for a house, if they can’t secure a loan, there is no sale. The second and most unpredictable factor is lack of consumer confidence which manifests into fear ... fear being the most insidious of all factors. It’s not surprising as this is what is emphasized with the media and our politicians ... negativity. Most news stories look for the worst and trumpet it. There’s rarely an article about what’s going right. It would also be truly encouraging if we could have a presidential election that didn’t pander to the worst in all of us. All of this negativity only adds to our fear levels when we have such severe downturns in the economy and the housing market. The problem with fear is that it gives rise to erratic behavior … and, thus, the most recent ups and downs of the stock market. That being said, the truth of the matter is that our local economy is still vital. The Washington, DC area has a far lower unemployment rate and far higher earnings than most other areas in the country. We are also experiencing far lower rates of foreclosures than are prevalent in other parts. Even though we have some of the symptoms of a bad real estate market, it is, by far, less than other areas. I’m not saying that our area’s property values haven’t been affected … they have; but not to the extent of some other areas. And, frankly, those values were artificially inflated by the credit markets, as has been apparent in the stock market, as well. On a very positive note, in September, we had positive sales figures throughout Montgomery County. Overall, real estate sales in Montgomery County were up 32% in September. High numbers were in Gaithersburg (20877) with an increase in sales of 158%, Gaithersburg (20878) with an increase of 71% , Potomac (20854) 88%, Rockville (20852) 87%, and Chevy Chase (20815) 57%. And, based on what is settled and expected to settle (currently under contract) in October 2008, that trend seems to be continuing. The sales in Washington, DC, however, were all over the place. Overall, real estate sales in DC were down .24% (1/4 of 1%), vs. September of 2007. However, they ranged from an increase of 25% in sales in Chevy Chase, DC to a low of -26% in Cleveland Park. AU Park also had a decrease in sales of 23% while the Burleith/Georgetown/Glover Park areas saw increase in sales of 17%. If you would like any more information on market trends, on what has sold in your neighborhood, or general questions regarding your home, please feel free to contact me. And if you are considering a move, this is still a great time to buy. Rates are a bit erratic, but overall, still historically low. In addition, prices are holding and will probably stay at this level for a while; so, if you are in a position where you need to sell anytime within the next couple of years, this is as good a time as any. Please call me. It would be my pleasure to be of service.