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Abstract
The District of Columbia Housing Monitor provides a quarterly look at the Washington, D.C., housing market, tracking home prices, real estate listings, new construction, and affordable housing. This issue's special section examines mortgage lending trends through 2005 and highlights the declining share of low income home buyers in neighborhoods throughout the city.
Introduction
The quarterly District of Columbia Housing Monitor
uses the most recent available data to illuminate housing
market and affordable housing trends in the city.
In addition, each report includes a special focus section
that analyzes, in greater depth, developments that
are shaping the Washington, D.C., housing landscape.
In this issue, the special section uses mortgage lending
data to examine trends in home purchase loans
through 2005 and to present a ward-specific analysis of
the changes in the characteristics of District home buyers
from 1997 to 2005.
The information presented in this report is supplemented
by data provided on the NeighborhoodInfo DC Web
site (www.NeighborhoodInfoDC.org/housing).
Key findings:
- Housing demand continues to slow; median thirdquarter
sales prices for single-family homes and
condominiums are down from one year earlier. In the third quarter of 2006, sales of single-family
homes were down 11.6 percent from the prior year,
while condominium sales dropped 54.1 percent.
Prices are starting to fall in response to the slower
demand. The median sales price of a single-family
home dropped to $465,000 in the third quarter of
2006, down 5.3 percent in inflation-adjusted prices
from one year earlier. The median price of a condominium
was $354,000, down 10.2 percent in real
terms from the third quarter of 2005.
- Real estate listings of single-family homes and
condominiums decreased between the third and
fourth quarters of 2006, but the time houses spend
on the market continued to increase. The number
of single-family housing units listed for sale
averaged 1,486 per month for the fourth quarter
of 2006, a decrease from the third quarter but still
considerably higher than the 2005 average of 774
listings per month. Listings of condominiums and
cooperatives decreased to an average of 1,659
units per month in the fourth quarter, but are
still more than twice as high as in 2005. Further
evidence of a market slowdown is provided by the
increasing time that both single-family and multifamily
ownership units spent on the market.
- Prices show definite signs of declining or flattening
in all wards except Wards 7 and 8. The two
highest-priced wards in the city, Wards 2 and 3,
saw real decreases of more than 10 percent in the
median prices of single-family homes between
the third quarters of 2005 and 2006. Meanwhile,
prices in the two lowest-priced wards, Ward 7
and 8, grew by more than 8 percent in real terms.
Other wards experienced modest price changes
(declines or increases) over the year.
- Home building slowed in the fourth quarter of
2006, and housing permits for the entire year were
down for the first time since 2003. New, privatelyowned
housing units authorized by building
permits totaled 2,105 for 2006, down from 2,294
units in 2005 but still higher than the 1,936 units
approved in 2004.
- Denial rates for home purchase loan applications
rose again in 2005; almost one quarter of all loan
applications in Wards 7 and 8 were denied. The
denial rate for new conventional home purchase
loans increased to 14.3 percent of all applications
in 2005, up from 13.4 percent in 2004. Denial rates
were highest in Wards 7 and 8, at 24.8 and 24.9
percent, respectively.
- Home buyers in Wards 5, 7, and 8 were more than
12 times more likely to take out a high interest rate
loan than were buyers in Ward 3. In 2005, almost
one of every five conventional home purchase
mortgages originated in the District was a high
interest rate loan. While only 3.1 percent of home
purchase loans in Ward 3 were high interest rate
loans, Wards 7 and 8 had the most prevalent use of
such loans, 44.3 and 45.0 percent, respectively.
- The share of home purchase loans for secondhome
and investment properties continues to increase. Between 1997 and 2005, the share of home
purchase mortgage loans to borrowers who did
not intend to use the home as a principal dwelling
(second-home buyers and investors) almost
tripled. In 2005, the highest rates of second-home
and investment borrowing occurred in Ward 8
(30.7 percent), Ward 7 (24.3 percent), and Ward 5
(21.2 percent).
- As housing prices have increased, the share of
home purchasers who are very low income has
dropped dramatically. In Ward 2, one of the highest-
priced wards in the city, the share of borrowers
who were very low income dropped from
11.5 percent in 1997 to 2.0 percent in 2005. In
Ward 5 (mid-priced), very low income buyers accounted
for 33.9 percent of home purchase loans
in 1997 but only 3.9 percent in 2005. In Ward 8
(low-priced), more than half of all home purchase
mortgages in 1997 (52.6 percent) were to very low
income households, but since then the share has
dropped to 20.7 percent.
(End of excerpt. The complete paper is available in PDF format.)
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