Market Conditions in 20854>Question Details

Michael, Home Buyer in 20850

Looking to buy a home in the million-dollar range in the Potomac/Bethesda area in the next year. Time is not

Asked by Michael, 20850 Thu May 15, 2008

a factor -- i.e., I could buy tomorrow or a year from now -- what's your best bet on when the market might bottom out?

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Hi Michael,

Current inventory is very high for homes in this price range and area, so you have a lot of selection. In general, demand for homes in Bethesda has been greater than for Potomac. Since you have time, I recommend that you get educated on the different areas and neighborhoods. Where do you want to be? What kind of home? There's a lot of older homes in the area - are you willing to renovate?

I've had buyers that would love a Bethesda location, but couldn't live with a older, smaller home typical in Bethesda in this range. For them, Potomac can be a good alternative. What's important to you? Narrow your search to meet your specific needs.

When will the market bottom out? If you are relatively certain that you'll be in your next home 5-7+ years, then I think this is a good time to buy. There's a very good selection and you can negotiate a good deal. I believe that you would be OK financially even if we see additional price depreciation in the next 1-2 years. If there's a good chance that you will have to sell in 3 years or less, then I would stay on the sidelines.

Good luck.
0 votes Thank Flag Link Sun May 25, 2008
Interesting thread with very carefully worded advice. I don't know where prices are heading, but there are so many sellers on the sideline in the 1M+ price range (the so called shadow inventory) that any significant positive price movement is sustainable. So you can wait for the 'right' house to come to the market.

A few comments that I don't quite agree with:
- I don't think that house prices double every 10 years in Potomac. That would mean that house values increase in value every year by 7.2%. A house bought in 1960 for $100K (very few houses back then would be sold at that price) would now be worth $3.2M (even a few years back, only very few properties would sell at that price).
- I think you should believe that you will be in the area for seven years before committing to buying a house. As recent history shows, 3 years can be the time that it takes to ride down the price peak (perhaps even longer). Chances are that prices then will not immediately shoot up, but linger for a while.
2 votes Thank Flag Link Mon Jan 18, 2010
Michael,

Please keep in mind I do mortgages and not real estate. With that being said real estate is always a gamble. There is no definate answer as to yes we have hit bottom or no we haven't hitten bottom yet. I've heard many different things such as the market will correct it self soon and others say that we still have a ways to go. But like a couple others have said prices have dropped and interest rates are low I would say now is the time to buy. Also in regards to interest rates I've heard that they will start to rise here soon and will not be coming back down for a while. So you need to put your trust in a good real estate agent as well as loan officer. Please let me know if I can be of further assistance. Thank you and good luck
1 vote Thank Flag Link Fri May 16, 2008
I think by now Michael has probably purchased a home. It would be interesting to hear from him about what he found, when he did buy, and if he has continued to see a drop in prices. As we all know, each area is different, and some where prices dropped last year, have seen a rebound this year. Price range also depends on the area.
0 votes Thank Flag Link Wed Oct 6, 2010
You should buy as soon as possible if you find a home you like. Right now the market is a bit soft, and there doesn't appear to be many buyers out there. So sellers who still have their homes on the market are willing to negotiate and probably take less than the list price. Plus the interest rates are historically low. So if you are financing the purchase, you will be getting a great price onthe money. I work alot in Potomac, especially around the $1Million mark. Let me know if I can be of assistance to you. Also, my web site (listed below) is linked to all the listings in our multiple listing system. Use it to check for active listings. The zipcode you want to search by is 20854. Amy Musher Prudential Carruthers Realtors 301-254-2697// 301-961-6000
0 votes Thank Flag Link Wed Oct 6, 2010
Michael,

My opinion is that we are holding steady. The market should hold its value at this point specifically in Potomac and Bethesda. Further out in places like Germantown and Clarksburg, this is not neccessarily the case. But closer in near Washington DC, properties are holding their own. This is also true of Checvy Chase in particular.

If you look at the trends over time, in potomac specifically, I conducted a study. I took a homogeneous neighborhood of modest single family homes in potomac. Over the past 50 years, their values doubled every 8-12 years (with an average of 10 years between cycles). The pattern was consistent with a cup and handle shape. First their is a level price point with a slight decline (think of the past 2 years). That was followed by a period of slow growth. Then about 5-6 years into the cycle there was an exponential upswing (the handle) that streatched about 2-3 years. That said, now is the time when we are at the bottom of the curve. If you plan to hold the property for at least 10 years, you should see the value double by then compared to where we are now.

The next part of the equation is the current interest rate. After April 30th, when the Obama $8,000 tax credit expires, I anticipate rates going up to as much as 6%. For both the rate and tax perspective, I believe your best option would be to consider moving on something before April 30th if you are comfortable with that.

I am a local expert. I grew up in Bethesda and Potomac. I graduated from Walt Whitman HS and my office is in potomac. I would be happy to talk with you about your options. I also have a listing coming on the market in February that would fit right with your criteria. Let me know if you are interested in working together.

In the meantime, check out what is active and what has sold in the past 3 months at my free website:
http://www.PropertyValueSnapshot.com.

Alex Saenger
Realtor & Internet Marketing Specialist
Serving Potomac Maryland, Montgomery County and all surrounding Maryland neighborhoods.
0 votes Thank Flag Link Mon Jan 11, 2010
If you are looking to buy a home...now is the time. Prices are low, Interest rates are low and inventory in this price range is high. This is an unprecedented time...typically, if prices are low, then interest rates are high and vice versa. With all the money that the feds are putting in to circulation, there will soon be inflation and higher interest rates. Good luck with your search!
0 votes Thank Flag Link Mon Oct 12, 2009
Hi Michael,

As a potential buyer in the same market as you (disclaimer: Bruce Lemieux is our buyer's agent), I would also mention that a lot of folks have been saying that Walter Reed's moving to Naval Medical in 2010, so the Bethesda market will not be heading down for some time since a lot of people will be settling down close to that area. Unfortunately, a mil does not buy you a whole lot in the Bethesda market (not that it buys a whole lot more in Potomac either).
0 votes Thank Flag Link Tue Jun 3, 2008
Hi Michael,

As a potential buyer in the same market as you (disclaimer: Bruce Lemieux is our buyer's agent), I would also mention that a lot of folks have been saying that Walter Reed's moving to Naval Medical in 2010, so the Bethesda market will not be heading down for some time since a lot of people will be settling down close to that area. Unfortunately, a mil does not buy you a whole lot in the Bethesda market (not that it buys a whole lot more in Potomac either).
0 votes Thank Flag Link Tue Jun 3, 2008
Interest rates could not be better and home prices are much lower.Sellers are anxious and more than willing to negotiate with buyers. Focusing on the home you want now that stops you in your tracks is what counts. Time not being a factor for you, I think the time is right to start looking seriously for what appeals to you.
Negotiating the price you want comes next, and if the Sellers are not willing, then move on to the next million dollar home in Potomac/Bethesda that appeals to you !
0 votes Thank Flag Link Mon May 19, 2008
Michael, hello again! As time passes by the cost of energy is increasing and maintaining a larger homes would be more costly! However, as Mansur said, RE market is what you make of it!

The best time to purchase a Million Dollar property would be in Buying Market! So, lower prices + lower rate = right time to buy or Lower demand + Higher supplies = right time to buy.

No one can forecast the future, however we find out about real estate bottom out, when we are already in the uptrend!

Hope this helps you with your decision.

Cheers,
0 votes Thank Flag Link Sun May 18, 2008
To answer your specific question, my guess on the market bottoming out in the Potomac/Bethesda area is late 2009 or early 2010. But, of course, I could be wrong. And even if I'm right, the decline from now to the bottom is likely to be fairly mild. That is, we're already reasonably close to the low point.

So, I wouldn't try to time the market precisely. (On a million dollar home, if the market goes down 6% more in the next year, that's $60,000. That's 1/2% a month, or $5,000 a month. So what if you buy 3 months prior to the absolute bottom? You've "lost" a grand total of $15,000 on a million dollar house. I'd suggest focusing instead on finding the right house for you. And then negotiating strongly enough that if there's a bit more of a price decline, you'll have gotten such a good deal on a house you really like that you won't mind at all.

Good luck.
0 votes Thank Flag Link Fri May 16, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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If you look throughout history, you will see the market has always operated in regular cycles. The cycles are from 5-7 years typically. Since our market peaked in 2005, we have a couple more years to go before we truly are at the bottom. While we have seen the worst of the decline, we still have a little ways to go. My thought however is that since both interest rates and home prices are at their lowest in years, now is an excellent time to buy. Best of luck to you, let me know if I can be of further help.
0 votes Thank Flag Link Thu May 15, 2008
Like the stock market, no one knows when we've hit bottom until we're on the way back up! I've heard estimates anywhere from this spring until 2010. Just keep an eye on the market - if prices seem to be increasing, make your move.
0 votes Thank Flag Link Thu May 15, 2008
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