WASHINGTON (WDVM) — As of June 2020, the housing market in the District of Columbia area has been hot. It has continued to remain steady, but experts warn that there may be a leveling-off coming.
Buyers and sellers like Richard McBride, a lifelong Washingtonian, are reaping the benefits of diving into the housing market. “30 days. Badabing, badaboom, everything is going quickly,” he said of his experience.
The McBrides decided to downsize, which entails selling their home of 14 years and purchasing another home simultaneously. McBride said the process started in mid-September, and by the time they hit a month, he expects they will have closed on the house they are purchasing and hopefully have offers on their current home.
In deciding whether or not to take the venture during the pandemic, he said, “We’ve been watching a very robust and hot real estate market, so deciding to sell right now was not too difficult.”
When it comes to selling and buying at the same time, he attributes his broker and realtor for helping things run smoothly for his family.
He said, “We have had excellent support with our realtor and mortgage broker to make this happen because buying a house before we’ve sold the old place is a bit of financial gymnastics.”
The market is very much so a seller’s market right now, but experts say now is the perfect time for buyers to take the leap.
Charlotte Yerkovich, the executive vice president with Motto Mortgage Connection explained, “We are at historically low interest levels. Just 15 years ago, we were looking at eight percent and in the 70s, we were in the teens.”
Current interest rates for buyers are as low as three percent. To put that into perspective, a $500 thousand loan with a three percent interest rate would equal $2,108 a month. If the interest rate raises by just one percent to four percent, that monthly payment would go up to $2,380. Each month, a person would spend $272 more, and each year, $3,264.
These low interest rates may not last long, however. Yerkovich explained, “They have just announced that they will be curtailing their bond-buying program, which is an indication that rates may be going up, so this window of opportunity to refinance may be coming to a close.”
The hot housing market is not only within the District of Columbia, but throughout the entire DMV.
Charles Klein, Principal Broker and Senior Vice President of Brokerage with RE/MAX Allegiance said, “From inside the beltway to Poolesville, Maryland and pushing out to Loudoun County and beyond in Virginia, it’s all strong, because people are changing what they believe they really need to live in.”
Klein attributes the pandemic and change to people’s work environment to the market changes. “People would quickly think, maybe I better go outside the city, cause I don’t need to be in the city now, and I can push out further than Arlington, Silver Spring, Bethesda or any of the closed-in areas.”
He said people also started taking a look at their equity and how much they need.
“They decided this might be a nice opportunity to sell their home, get some equity and use it to buy something smaller or have some put away for retirement,” Klein explained.
For folks like the McBrides, the downsizing was a no-brainer.
“The place we’re going is less than half the size. We’ve been looking at where we might want to land in a downsizing opportunity, and this house came on the market and checked all the boxes, so we jumped on it,” McBride said.
For anyone contemplating whether they should rent or buy, experts say buying is always better.
Klein said, “You should always try to convert whatever you are thinking you are going to spend on rent and the tax dollars you won’t get to save because you won’t have a deduction, and think what can I buy with what I’m willing to spend on rent. With all the loan programs that are available, you should look at that closely, because rates are still low.”
Yerkovich added, “We do have more common sense guidelines as well, that allow more down payments for the increase in home prices. Now is the time to lock in those low interest rates that will equal thousands of dollars in savings annually.”