Sunday, June 24, 2007

The slower market segments

Is it just me or has the market for homes between 600k & 1.2 million slowed down significantly. I've been watching the market and monitoring my listings quite closely and it seems like the most affected segment of the market are the upper-middle class buyers.

For those homes under the 600k price, my impression of the typical consumer would either be a 'DINK' couple, that's dual income no kids, or first time home-buyers purchasing their first home using one of the many programs offered to them by the city of DC. Being younger myself, I can only more easily relate with the first time home-buyers similar to that of my age.

Take my newest set of clients, I'll call them A & G, they are in their later 20's, one an aspiring and very successful Gelato manufacturer based out of Petworth (go figure) and his wife, A, an extremely outgoing and representatively successful liquor distribution representative who happens to have more clubs & bars buy her product because of her rather than for the product itself. I know, I'm one of them. So A & G wed about 4-6 months ago and it's time for their first purchase. We've been out a few times and each time we go out I try to get a better visualization of their new home based on their feedback from their current homes. Well, it seems like everything is on track and they are finally ready for those last few homes on the market before making their final decision. So far their favorite unit is at the Barcelona on Chapin St NW. They love the urban-loft style of the building with the open space and feel. Given this has become a new generation of units, from the larger developers such as PN HOFFMAN projects (more on this in a later blog) to the smaller developers, like Brook Rose and one of his development in Columbia Heights at 1207 Girard (breathtaking!). A & G and I are going out this Thursday morning and I'm sure we'll find something for them to settle into during their first few years as newly-weds.

Left: A photo of the interior of one of Brook Rose Developments kitchens.

Over $1.2 million: Can someone say disposable income?!?!

I haven't even seen a quiver of market slowdown with this market. Properties are moving and I don't doubt that this consumer base actually understands that its not timing the market, its time IN the market. Properties in this base have been moving at quite a steady pace. From the Kalorama homes (none of which are less than $1.5 million) to the exquisite homes in the Palisades, its as if those with higher disposable incomes know something the rest of the purchasing population doesn't.

According to GCAAR, my local board of Realtors, there was a 66% increase in settlements for homes over $1.5 million this past month, and a 133% increase in new listings over $1.2 Million.

What does this all mean?

It means that buyers can get a great deal on a home that falls between these two market segments if they are looking to purchase in the near future. To add fuel to the fire, mortgage rates are slowly creeping up, further affecting the future of these same buyers.

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