DC Real Estate Market Post Record Performance – Despite Covid Concerns.
The pandemic real estate performance statistics are formally in and guess what? The DMV area had another record-breaking summer season. In July 2020, the median home price hit a ten-year high, posting a 13% boost from last year. What does it mean to a local investor? It means that if she purchased a residential property for $200K last year, she would be at least $26K wealthier today. Just think of it– $26K in equity by doing absolutely nothing.
Naturally, none of our customers are “doing absolutely nothing.” The name of the game is to purchase a property priced below market and to build additional equity by rehabbing it. As a private lender in Maryland, we advise our borrowers not to depend on appreciation when assessing the after-repair value. Still, that additional 26K is a nice cherry on top of your hard-earned profits and a significant tailwind for building long-term wealth.
Remarkably, the DC-area real estate market experiences such tailwind year after year, pandemics be damned. It has enjoyed such appreciation for the last 10 years, with the average prices growing from $374,000 in July 2010 to whooping $470,000 this year.
To no small extent, the record appreciation rates experienced this year is a product of the low supply of homes offered for sale. As it usually happens in the well-to-do markets, the homeowners can hold off on selling their residences if they perceive the conditions not to be suitable. This is exactly what happened when the local authorities introduced quarantine measures last Spring. The borrowers who were not under pressure delayed selling their homes or pulled their existing listings off the market.
But not all sellers could afford to do so. Take a wholesaler who put a property under contract in March, right before the Covid restrictions took place. The restrictions unnerved not only sellers but also buyers, particularly those trying to purchase a home to flip. I remember those times well: Even experienced rehabbers backed off and eyed the market cautiously. And what do you do when the demand suddenly withers off? You reduced your price. In hindsight, that time of peak uncertainty has been an excellent time to snatch a bargain or two. I am glad to know that several of our borrowers did just that.
Normally, even the DC real estate market does not supply a straightforward and fast pathway to wealth. The competition among real estate investors is high, and it takes both time and effort to identify the right residential property to flip. You have to hustle and also have some luck. But the fundamentals for success are strong. The general volume of the DC-area real estate transaction are up 7% from last year, and the brand-new listings are up by more than 20%.
Do not squander the possibilities the DC region offers. Venture out there and make deals! Fall is a wonderful time to purchase a property to rehab and renovate it by the spring market. Our Mayland hard money loans offer superb pricing, easy underwriting, and come with impressive personal service and local expertise.