Buyer's Guide: Is a Plunging Market Best for Buyers?

IF IT'S A BUYER'S MARKET right now, what's with all the "For Sale" signs swinging in your neighborhood? And if you're thinking of selling, is this really the worst time since the Great Depression to be calling a real estate agent?

Even seasoned real-estate buyers and sellers are feeling edgy and unsure in the gloom of the current housing climate.

Shrieking headlines about condo prices in free fall and the subprime mortgage crisis pepper the Web and newspapers every day, only amplifying the chatter of everyone from your open-house obsessed Starbucks barrista to well-meaning relatives who keep telling you to quit renting already. So, what are you supposed to do in this crazy market? Buy? Sell? Pitch a tent somewhere near the Washington Monument and wait it out?

Agents and sellers who have managed to move a piece of property in recent months say that selling now revolves around two key factors: pricing your home accurately for the market, and making it shine in a sea of competitors.

Ahem, that means clearing out the magazine piles, putting into storage that overstuffed chair you love that — let's face it — slashes your living room's actual living area in half, and, in general, de-personalizing your home so a potential buyer can imagine his or her stuff in it.

"You have to make the place really sparkle," says Michael Tubbs, an agent with Coldwell Banker on Capitol Hill. "First impressions are so important in a competitive market. Staging" — the process of artfully arranging your own or rented furniture and decor in a home to make it look ultra-appealing — "is more important than ever." Even basic upkeep like washing windows or applying a fresh coat of paint can go a long way these days.

Pricing is the other critical piece in the current crowded market. And the field is packed with competition: According to data from the Greater Capital Area Association of Realtors, there are more than 1,500 condo or co-op units in D.C. alone on the market as of the end of March (the most recent month for which figures are available) and about 1,600 single-family homes in the city. In just Montgomery County, about 4,374 single-family homes were clogging inventory as of March.

"Pricing properly now means that you need to be either the No. 1 or 2 lowest-priced home in your marketplace," says Ann D'Ambrosia, senior vice president at the GMAC Real Estate Service Center in Largo, Md. "Buyers determine the value. Price, matched with the condition [of the property], is the only issue in this market."

Especially when so many properties are for sale, people who choose not to snag a pad often hear about how they're missing out on a rare opportunity to jump into real estate during a buyer's market.

Jennifer Kaleba, director of communications at Rails-to-Trails Conservancy in Northwest D.C., gets periodic nudges from home-owning friends and relatives. But she says she and her husband have chosen to continue to rent for several carefully considered reasons.

"Starter homes no longer come with starter-home prices," she says. "Everyone and their mother is lecturing you that buying now 'makes more sense.' But sometimes, the numbers don't make sense at all."

Kaleba, 30, and her husband, Casey Kaleba, 29, who is working on a doctorate in theater at the University of Maryland, rent a house in Hyattsville, Md., located about "one-and-a-half songs on the iPod" away from the Metro stop there.

"When we first moved in, there was this big green space nearby," says Jennifer. "But about a year and a half ago, all these condos starting coming in" to fill it, which she attributes partly to spillover from the revitalization that has rolled through nearby Silver Spring. As a consequence, housing prices in the area have risen quickly. "We'll say to each other now, 'Well, we couldn't have afforded to buy anyway,'" says Jennifer.

Even in this flat or declining market, the couple stands by their decision to keep renting. "Yes, I'm an adult, and I need to make this investment sometime," she says. "But do we want to be eating ramen every day" to be able to swing a monthly mortgage payment?" Both of them say they're comfortable paying rent to invest in "our quality of life, not in property," as she puts it.

Software programmer Mike Lee and his family are also choosing not to purchase in the D.C. area. Lee, and his physician wife, who have three children, rent a house in Earlysville, Va., near Charlottesville. While her job is expected to bring the family to Bethesda later this year, other potential relocations inherent in her work — coupled with the state of the local market — give them both pause when the prospect of buying a home in the D.C. area comes up.

"It makes you sit back and think, 'Is this really a good time to buy?'" says Lee, 39, who managed to sell a house in another tough market—San Antonio, Texas —before moving to Virginia. Ultimately, both he and his wife agree that "the known risk of renting is more tolerable than the unknown risk of buying."

Richard Green, professor of economics at George Washington University and director of its Center for Real Estate and Urban Analysis, blogs about real-estate trends at Real-estate-and-urban.blogspots.com. His advice to those considering buying a roof to put over their head: Rather than panic about the market's wild gyrations, consider your monthly income and that of your spouse or partner, if applicable. "If you can own without it costing much more than renting on a cash flow basis, it is a smart thing for first-time buyers to do," Green says. "If not, you should wait."

Sure, there are plenty of buyers for whom the real-estate world is said to be at their feet. Folks like Sharon Bibee, who snagged a condo in Shirlington in July, say that careful research about the market plus a patient real estate agent who explained all elements of the transaction paid off in a big way: She got her dream condo.

"I really felt like it was a fairly good deal," says Bibee, 40, of the two-bedroom, two-bathroom unit with a parking spot for which she paid $370,000. "I'd been looking for a while, and this is one of the first places I had seen back when I was only looking half-heartedly."

Bibee, who works for the federal government, says she would compare every condo she saw subsequently to the one she ultimately purchased. "It has the granite counter tops and the tile floor and the building amenities I wanted," she says. "Other places I saw I didn't like nearly as well, plus the [monthly condo] fees were the same or outrageous, sometimes $700 per month." Bibee's current fee is just over $400.

She gives props to her agent, Colin Concannon of Green Dot Realty in Fairfax City, for being supportive during her first real estate purchase. "When you start thinking about how much money you are spending and how stressful the process is, it's easy to get overwhelmed, but he guided me through," she says. "I felt like he was someone I could trust."

Concannon, whose brokerage deals largely in "distressed properties" — aka bank-owned houses that have been foreclosed upon — takes the long view when it comes to coping with a down market.

"You have to look at what this [greater D.C.] area has done historically," he says. "Back in the early '90s, we were facing the exact same insanity"— an overheated market followed by a plunge. "Is it really that bad of a market? No, it is a different type of market."

As such, sellers can't get hung up on the fact that they aren't fielding 10 offers in the first three days of listing their property, he explains; it ain't 2005 anymore. "If you are trying to sell your home these days, know that it is not going to happen fast."

Journalist Anjetta McQueen knows that all too well. In December, she sold her one-bedroom condo in Kalorama after it languished on the market for nearly a year. Now renting in Los Angeles' San Fernando Valley, where she relocated for a job, McQueen is circumspect about her experience.

"I bought my place for $330,000 in 2004, and sold it for $310,000," she reports. "As difficult as it was [to lose money], I count myself one of the lucky ones. It's just me; there wasn't a child put out on the street." McQueen, 41, says it was very difficult to compete with the many other condominiums on the market in and around the District — even with hers in such a desirable neighborhood steps from Adams Morgan. The market in Los Angeles is "pretty depressed," she adds, so coupled with the loss she sustained here, paying about $2,000 in monthly rent almost feels good, all things considered.

When a house or condo does sell within weeks — and it does happen, all the agents interviewed for this piece concurred—GMAC's D'Ambrosia says that a few factors almost undoubtedly came into play.

"It was in great shape, it was competitively priced, and the seller was negotiable on terms such as agreeing to pay some or all of the purchaser's closing costs," she says.

Marketing counts, too. "Sellers need to make sure that the agent they choose to sell their home not only has strong pricing skills, but also provides the tools and the services to expose their listing to as many buyers as possible." Many agents, D'Ambrosia contends, lack the right tools for the kind of exposure that a well-priced listing requires now.

Coldwell Banker's Tubbs points to the paradox with which today's buyer must cope. "On the one hand, it's a very good time to be a buyer, and it might continue to get better," he says. "But some buyers are saying to themselves, 'This is like buying stock. Will this house that's priced now at $450,000 come down to $430,000?'" There's no way to know for sure.

In the face of such ongoing uncertainty, at least one prediction Green made is comforting.

"Long term, I'm bullish," he says. "D.C. is a great city and has unique characteristics that aren't going away soon."

Written by Amy Rogers Nazarov for Express
Photos by Lawrence Luk for Express; iStock