Hot Residential Real Estate Market Cools off with Rising Interest Rates
Burn, Timothy, The Washington Times (Washington, DC)
Rising mortgage interest rates and declining inventory are putting the brakes on a red hot Washington area residential real estate market. But industry experts still expect 1999 will end as a record-breaking year for home sales.
Following a national trend, sales of existing homes throughout the Washington metropolitan area are running well ahead of 1998, which was a record-setting year.
"It's really booming throughout the region," said Charles McMillion, chief economist for MBG Information Services, an economics firm in Washington.
"The District real estate market appears to be particularly hot this year, largely because it was ignored for so many years. But in the last two years buyers have been scooping up tremendous bargains," he said.
Across the region, 52,762 existing homes were sold from January to November, up 12 percent from the same period in 1998. Sales in the District were up 17 percent from last year, up 9.3 percent in Montgomery County and up 9.8 percent in Northern Virginia.
For decades, prospective home buyers flocked to the inner suburbs, to places like Rockville, McLean and Arlington. While those areas remain strong, more often these days home shoppers are looking downtown or in the outer suburbs for their dream home.
The move downtown has been driven partly by declining crime rates, declining unemployment and a growing confidence in the D.C. government's ability to manage the city. Also, people continue pouring into the District to cash in on a $5,000 tax credit available to first-time buyers.
At the same time, declining inventory and rising mortgage rates are starting to dampen the market as the year comes to a close. …