In the recent years after the low and never seen interest rates that we had seen in the years of 2003 and 2004. A large number of job seekers moved to the expanding FDA, new convention centers, hotels, and stadiums; the inflation was out of control.
With many new developments and rates still lower than the 90’s, the market is in a state of correction. Despite of the slower sale pace last year, the Washington metro area housing market saw its third highest sale year on record behind 2004 and 2005. An analysis of Metropolitan Regional Information Services data showed sold dollar value totaling near $40 billion in 2004, $42.5 billion in 2005 and $33 billion in 2006. Right now, the housing market might be seen as a weakness for the economy, but other sectors continue to pick up the slack, and employment growth, population gains, and income growth persist.
In 2007, the Washington area economy will continue to expand at a decelerating pace, with job growth and government procurement spending growth easing in the region. Current conditions suggest the housing market will continue to adjust from the rapid price appreciation experienced in 2004 and 2005. This adjustment period should lead to the average number of days on the market rising further, as buyers wait to see how much more home prices will decline. However, by late spring, we expect that consistent demand (generated by job growth) and a reduction in new construction will stabilize pricing, and that the second half of this year will bring improving market conditions.