By Dina ElBoghdady
The Washington area’s real estate market is continuing to recover, according to several reports this week, which showed that housing prices were up in the region even as they declined across much of the rest of the country.
The region’s thriving job market, particularly its relative abundance of high-paying positions and its reliable supply of federal work, played a large role in boosting the area’s numbers, analysts said.
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April 26 (Bloomberg) -- Karl Case and Robert Shiller, founders of the S&P/Case-Shiller home-price index, talk about the outlook for the U.S. housing market. Residential real-estate prices dropped in the 12 months to February by the most in more than year, putting the market on the verge of eclipsing the nadir reached during the U.S. recession. Case and Shiller talk with Matt Miller and Carol Massar on Bloomberg Television's "Street Smart." (Source: Bloomberg)
The region was the only one of the 20 major metropolitan areas tracked by the Standard & Poor’s/Case-Shiller price index to post a price gain in February. Area prices for single-family homes rose 2.7 percent from a year earlier, the closely tracked index showed. They were 81 percent above the January 2000 level.
A separate analysis by the research firm Delta Associates this week found that average area home prices jumped 3.2 percent in the first quarter from a year earlier to $369,279. That marks the region’s sixth consecutive quarterly gain.
Meanwhile, the number of contracts signed by home buyers in March surged to 5,436 — the highest total for that month in five years, according to RealEstate Business Intelligence, a subsidiary of the local multiple listing service. The results track with gains at the national level, where contract signings in March, or “pending sales,” rose 5.1 percent from February, the industry reported Thursday.
Despite these upbeat findings, the federal government’s push to rein in spending and any setback in the wider economy could undermine the area’s housing market.
“It can get tripped up by macroeconomic activity,” said Jim Diffley, a senior director at IHS Global Insight. “Right now, the biggest risk is oil prices blowing up because of the problems in the Middle East.”
The Delta report shows that prices remained highest in what it calls the “core jurisdictions” — the District, Alexandria and Arlington. Average home prices in that grouping climbed 5.4 percent in the first quarter from a year earlier to $485,159. The largest gain was in Arlington, where prices rose 7 percent.
Price gains in the rest of the region were more modest.
In the “inner ring” — Fairfax, Montgomery and Prince George’s counties — the average price rose 1.3 percent to $356,987. Gains in Fairfax and Montgomery offset steep declines in Prince George’s, where prices fell 10.2 percent.
In the “outer suburbs” — Loudoun, Prince William and Frederick counties — prices were up in every jurisdiction. They climbed 1.9 percent in the first quarter from a year ago to $303,575.
Aside from its relatively strong job market, the Washington region benefitted because it was not as hard hit by foreclosures as many other parts of the country, said Greg Leisch, Delta’s chief executive.
The area’s tight rental market also did its part to buoy home-buying activity, Leisch said. There are so few vacancies here that rental rates have soared in the past 18 months, and renting is no longer the bargain it used to be, he said.
“If you combine all these factors, our for-sale housing market is in better shape than any other metropolitan area in the country,” Leisch said.
Even when it comes to the number of contracts signed in March, regional numbers are better than national ones on a year-over-year basis, according to the RealEstate Business Intelligence analysis.
The area’s pending sales were up about 34 percent in March from the previous month and 2 percent from the previous year, on a non-seasonally adjusted basis. Nationally, they were also up about 34 percent month over month, but they slid 11.5 percent from a year earlier.
Jonathan Miller, an independent analyst who compiled the statistics for RealEstate Business Intelligence, said the contract numbers were not seasonally adjusted to account for a federal tax credit for home buyers that sparked a buying frenzy last spring but has since expired.