This home at 825 4th St. NE reportedly had 138 bids to buy it when it went up for sale. (Sarah L. Voisin/The Washington Post, via Getty)
The house was sold for $760,951—which is $360,951 over the asking price, and $260,951 higher than similar homes have been going for in the area. And frankly, having moved to D.C. five years ago, even $500,000 seems a little much for a house in that condition.
What on earth is going on in my city? Surveys of neighborhood home sales have found year-over-year increases of up to 75 percent in some neighborhoods. Consider this string of home prices, for a small house in Capitol Hill:
June 2000 List price: $149,000. Net sold price: $139,874.
July 2004 List price: $319,000. Net sold price: $314,000.
March 2007 List price: $399,900. Net sold price: $385,000.
April 2009 List price: $449,000. Net sold price: $432,500
It just sold again for $485,000. The Washington Post says that bidding wars are breaking out all over the district:
The median home sale price in the District is up 14 percent from last year, according to RealEstate Business Intelligence (RBI). And the average number of days houses spend on the market has fallen by nearly 30 percent, to 53 days.
This seems crazy to me. Yes, D.C. is a desirable place to live, and of course mortgage rates are attractively low. But bidding wars are getting outrageous—my mother lost multiple houses, one of which had 28 offers on it. My mother, who sold real estate in New York for decades, held firm: if she couldn’t buy a house at a decent price, she wouldn’t buy at all. But that just highlights the frenzy that these bidding wars are generating in others. The normal pattern seems to be that people lose multiple houses, then decide they’ll pay anything.
This post was modified from its original form on 22 Dec, 4:51
Since I have lived here for eight years, I can answer these questions. The real estate is expensive in DC and the surrounding areas and has been for as long as I can remember. The closer you live to "the District" the more expensive the real estate.
It all comes down to a shorter commute to government jobs. People who live in out lying areas such as Manassas, Reston, Rockville, Maryland, etc spend at least two hours and more in their cars every day getting to and from work not to mention the gasoline prices they pay to do so just so they can have more reasonable real estate prices. So, it's a trade off. Move closer, pay much higher prices and take the train to and from work and instead of having two cars you only need one.
There is also a shortage of inventory of homes on the market. People aren't putting their homes up for sale until they retire. We have a lot of baby boomers living in this area and they are holding on to their investments. So, what is happening today is that since inventory is low we are getting into a bidding war and it is now beginning to drive the prices up.
Owning a home/property in this area is a great investment because of the military jobs/government jobs and the high influx of young college graduates who flock here to take jobs that pay them over $100,000 a year. This market is booming and has been through the "great recession."
For us, we bought here to be close to the Metro and we are only four stops from The Pentagon. We are only five stops from getting into DC. We have one car because that is all we need. We have little shuttle buses which stop at every corner to take you from point A to point B for $1.25 a ride. When we retire, we can walk across the street to our grocery store, dry cleaners, dentist, restaurants and doctors. It's a great area for retirees and the young newly married couples. It's not unusual for young married couples to have a combined income of $300,000 a year. Sounds great....but if they want to rent a two bedroom townhouse/condo it will cost them $2800.00 a month or if they want to buy a home of 1,500 square feet it will cost them $700,000. It's all relative but the real issue is that people here do not want to be in their cars commuting to work two to three hours every day. If couples hire a nanny to watch their young children that can cost them $3,000.00 a month.
So why would anyone that does not have to be there for work want to live there and second, would that not put a damper on people wanting to work for the government? No thank you, I prefer a little less expense as even though buying a home would be less than renting, the cost of living there in other respects would be way too much.
Nice place to visit but for me not the best place to live. But I know that there are people that have no choice.