Tuesday, October 30, 2007

Case-Shiller Index: DC area home prices continue to fall

Standard and Poor released the latest S&P/Case-Shiller Home Price Index (henceforth, CSI) today. It shows that homes prices continue to decline in the DC metro area, down 0.9% July-to August, down 7.2% in one year.

"At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround [my emphasis]," says Robert J. Shiller, Chief Economist at MacroMarkets LLC. "Year-over-year and monthly price returns are continuing to either move deeper into negative territory or are experiencing persistent diminishing returns. There is really no positive news in today's report, as most of the metro areas are showing declining or vanishing returns on both an annual and monthly basis. Only two metro areas – Denver and Detroit – showed improvement in their annual returns and even those were reports of slightly less negative numbers."

The CSI states that DC's August result is its lowest recorded annual return.

Condo Price Cuts: October Update

During the year I've been tracking condos listed on MLS to identify sales by flippers and determine their anticipated profit; I've used this information in many of my posts. I periodically monitor this data source for pricing actions as the year progresses to see the degree to which prices are falling, if at all. I last posted my observations in late September.

The table below shows a comparison of asking prices for condos. I compared listings from September 23 to those I found on the Internet at the end of last week. Of the 419 condos listed on September 23, 219 are still listed under the same MLS number. Of those 219, 77 have reduced their prices, two have raised their prices (!), and the remainder have made no changes. Of note:

  • Can you believe a condo's price can be cut by $300,000? $100,000?
  • At the Whitman, MacBallard | Williams has cut the prices on units #201, #301, #620, and #901 by $20,000-45,000 while raising the price for #509 by $40,000.
  • At Chase Point, the developer has cut the prices on units #212 and #PH2 by $134,000 and $99,000, respectively.
  • Again at Chase Point. Although the owner of #711 has reduced his/her price by $225,000 (!), s/he's still trying to gain a profit of $769,400 after owning it for four months and 14 days. Excuse me while I pause to catch my breath.
  • Six units are listed at The Atlas [1111 25th St NW]. You may remember unit #101, which had reduced its price by $64,500 in September; it's dropped another $29,901. Unit #723, another $25,000 drop. That's a loss for #101 ($74,901) and #723 ($49,900) from their original purchase prices in 2005.

The table below shows the price changes [click on it to view an enlarged copy].

Thursday, October 25, 2007

The NAR Report: What wasn't reported

At times like this, I recall my Tulane University statistics professor's famous mantra: "It's about the data!" [Hi Russ!]

Yesterday, I posted a link to a NY Times article reporting that the National Association of Realtor's analysis of existing homes sales in September showed an 8% drop in sales compared to August. Well, they [the NY Times] didn't tell the full story. NAR states that, nationally, seasonally adjusted sales data year over year (YoY) showed:

  • Unit sales dropped 19.1%
  • Prices dropped 4.2%

Strip out seasonal adjustments and national sales data show:

  • Unit sales dropped 28.9% from August to September
  • Unit sales dropped 22.7% YoY
  • Prices dropped 3.2% YoY

In today's NY Times we read:

Global Insight, a research firm, predicts that the national average for housing prices will drop 5 percent over the next year and 10 percent before mid-2009, for a total of about $2 trillion. Economists at Goldman Sachs have predicted prices will drop by 15 percent, meaning an overall decline of more than $3 trillion; other forecasters have said the decline could be 20 percent or more.

NAR's explanation for its findings:

Temporary problems in the mortgage market are easing and are expected to free some pent-up demand, but disrupted existing-home sales and distorted prices on sales closed in September, according to the National Association of Realtors®. Even so, prices rose in the Northeast and Midwest.

Is this what they call "whistling past the graveyard?"

Wednesday, October 24, 2007

September MIRS Report: Maybe not an anomaly

An article in today's NY Times hints that the awful September MRIS data I reported two weeks ago may not be an anomaly. NAR reported that sales of existing homes fell 8% in September, "the slowest rate in at least 8 years." Inventories rose to a 10.5 month supply.

In answer to my question whether the light at the end of the tunnel was a train headed our way, we're told:

"The bottom is just falling out," said Bill Hampel, chief economist of Credit Union National Association. Mr. Hampel said the outlook for the housing market remained grim. "Next month will be about as bad as this month," he said."

Monday, October 22, 2007

DC Sales: August 2007

I've finished my analysis of full value residential sales the District recorded in August 2007. Coming on the heels of MRIS' September report, the information may be a bit anticlimactic as we wait in trepidation for October's data. I think the question everyone is asking is, is that a train headed our way?

As I mentioned earlier, I'm now restricting my analysis to condos and single family homes; I feel more confident in the analysis if I omit properties the District classifies as multifamily conversions. I know I'm excluding some that are legitimate single family homes, but I want to eliminate uncertainty.

All data has been uploaded for viewing on DCHomePrices.com and DCCondoPrices.com

State of the Market

In August 2007 the District recorded 711 residential sales, 9.89% less than the same month in 2006. Unit sales were almost evenly split between condos and homes while, in terms of dollar volume, homes led 60.05% vice 39.95%, both consistent with past months' results.

Viewing the data at a District level, four wards had a decent month in terms of pricing. Two wards experienced declines in average and median prices, one had lower average prices while another had lower median prices. All but two wards had lower sales volume.

Condo sales continue to dominate Wards 1 and 2. In Ward 1, 69.9% of sales were condos and in Ward 2, 84.28%.

Distribution of Sales

The chart below shows the distribution of August's recorded sales by sales price; 57.1% of recorded sales were priced $450,000 and lower.

Changes in the Market YoY

Average prices were up 6.01% in the aggregate; median prices were up 2.51%. Sales volume was lower for homes and condos, down almost 10% for each. Home prices appear to demonstrate the inverse of the old joke: what they lose on volume [fewer homes sold], they make up on sales [higher prices for homes].

Condos

The number of condos sold [existing and new] fell 9.93% YoY and prices were flat to negative. Sales in Wards 1 and 2 [Dupont Circle / Penn Quarter / Logan Circle] represented 56.75% of total condo sales, with 19.83% in Ward 1 and 36.91% in Ward 2 . A few condo buildings are still coming online as others sell their remaining inventory:

This article has a very interesting take on the condo market in Columbia Heights; Kenyon Square is discussed:

Two of the most visible high end projects steps away from the Metro are the Kenyon Square and Highland Park buildings, both developed by Donatelli Development, Inc. The Kenyon advertises to its desired clientele with a bright green sign reading “Scone. Newspaper. Starbucks. Less than 20 steps to the Metro.”

Kenyon Square has a total of 153 units with about 30 left – but the building isn’t finished yet. Highland Park which has yet to open, is only half sold – something that would have been unheard of in 2005.

According to local realtors, what’s hurting some of these new projects the most are contract cancellations coupled with excess inventory. A lot of buyers pulled out, according to Barry Smith of Domus Realty, who is handling marketing and sales of both the Kenyon and Highland Park. People who bought in at the beginning of the projects were planning to put down a deposit, ‘flip’ the property and sell the place after a couple of years hoping to make a generous profit.

“When the market leveled off and eventually declined...investors wanted to get out” Smith said, “and that 5 to 7 percent deposit was the best way to go... People said, ‘Keep my deposit, I don’t want the home anymore.’”

I'd thought sales from 1010 Mass would begin appearing in August's data, but that didn't happen. While driving by Chase Point condos today, I saw a PN Hoffman "open house" sign posted on Military Road. I saw an "Immediate Delivery" banner on The Sonata yesterday. I think there's blood in the water...

Single Family Homes

Although overall demand for single family housing is down 9.84%, higher average prices for all segments enabled positive growth in aggregate average and median prices. Average prices rose 11.5% and median prices were up a smidge more than 9%. Wards 3 and 4 accounted for 62.5% of detached home sales.

Purchase the Data

For $5.00, you can purchase a listing of the August home and condo sales recorded in the District discussed in this post. Information in the listing includes [see below]:

  • Address
  • Sale price and sale date
  • Unit number [if a condo and if available]
  • Price per square foot
  • Square footage
  • The number of bedrooms and baths for each unit


Note:
I use the District's downloadable data, which usually has a 6-12 month lag, meaning that the data doesn't include condos or homes completed within the past year. Data may not be available for all properties. My analysis is dependent upon the completeness and fidelity of the District's appraisal data.


August 2007 Sales Listings


Detailed Data

Aggregate by Zip Code

August 2007 average and median sales prices and unit volume by zip code.

Aggregate by Ward

August 2007 average and median sales prices and unit volume by ward.

Category by Zip Code


Category by Ward

Disclaimer:

  • Unlike MRIS, my data and analyses include new units [primarily condos] so there will be some differences in my conclusions about the market's state compared to a similar analysis based solely on MRIS reports, which only report sales of existing units sold and/or listed by real estate agents.
  • This analysis is of sales recorded by the District during the month as opposed to sales settled in the month, which is what MRIS reports, so there may be some discrepancies because of timing issues. However, I believe the data do provide a helpful indicator of trends in the District.
  • My analysis is based on District sales and appraisal data that I've collected and processed. I've deleted those sales that appear to be of questionable data quality. Errors are always possible.

Thursday, October 18, 2007

Data uploaded

I've uploaded data for residential sales the District recorded in August to DCHomePrices.com and DCCondoPrices.com; it's available for viewing now. I've also completed the data analysis, should be able to get that posted by tomorrow evening.

Wednesday, October 17, 2007

DC Sales: August 2007 (Sales by Ward)

I've just about finished processing the data for sales recorded in the District in August. I should have it completed and uploaded to DCHomePrices.com and DCCondoPrices.com by week's end. I have done an initial analysis of the data to determine the average sales price and sales volume per housing type by ward [see the table below - click it for a larger image]. One change I'm making from this point on is I'm omitting all properties that the District has categorized as multifamily conversion. I just don't have enough confidence in the data to use it any more.

If all goes well, I'll have the data tables and the analysis available by Friday. I should also have the listings available for purchase then, too.

Sunday, October 14, 2007

Senate Square: Contra-rondo?

I received an email last week from a fellow telling me that Senate Square condominiums was going apartments. Located at 201 I St NE, the building was described by DCLofts:

Near Union Station, this 480-unit development [actually 432], formerly named Senate Square Condos, will have two new 12-story buildings next to the Children's Museum which is being renovated into lofts by Abdo Development (Landmark Lofts at Senate Square). The buildings are called The Concord and The Lexington. Units will have hardwood floors, 9-foot ceilings, floor-to-ceiling windows, and upscale finishes including granite countertops and stainless steel appliances. The building will have a rooftop pool and fitness facility. Designed by Esocoff & Associates.

Original prices are expected to range from the mid-$300's to over $900's for one and two-bedroom floor plans, many with a den.

According to this site:

Sales have 'temporarily halted' - until Sept. 24, while - officially - they await new higher prices. Unofficially, stopping sales at this point means - they are keeping all options on the table? 432 new condos in two 12-story towers next to the old Children's Museum (now Landmark Lofts)... Prices reduced - studios from the high $200s, 1 BR's start at $334,000, 2-bed units start in the high $400k's - not bad deals, 145 units have sold, occupancy on West building now delayed until Nov. 2007... Development by Broadway of New York, one of their first DC projects (also building DuMont), sales by Mayhood, marketing by Shvo of NYC. Sales began in September of 2005.

A view of the building's web site confirms its conversion to apartments. Back in the boom times, the word "rondo" was coined to describe apartments being converted to condos.

Rondo: new building rental-to-condo conversion, often occurring prior to building occupancy. Generally not used to describe conversion of longtime rental
buildings. [a tip of the hat to this site for the definition]

Witness 555Mass and the Radius. So now what word should we use for condos that are converted to apartments? Conpartments?

Friday, October 12, 2007

MRIS September Housing Report: The Market Dives

MRIS released its report on September of existing homes and condos [those listed or sold by real estate agents] in the District this week. August's data indicated that sales had returned to "normal", i.e., flat to negative, but September's YoY data was jaw-droppingly bad. Key data points:

  • Dollar volume was down 37%
  • The average price was down 3.65%
  • The median price fell 17.58%
  • The number of units sold - transaction volume - was down 34.61%
  • Average days on market increased 4.55% to 69 days

In September we see:

  • Sales volume. Overall, down 34,61%. YoY, condo sales volume was down 27.45% and home sales volume dropped 41.43%. Sales volume was negative across the board, with decreases ranging from 22 - 61.29%. Condos represented 54.15% of the units sold.
  • Dollar volume. In aggregate, down 37%%. Dollar volume for condos and homes was negative: -40.01% for condos and -35.11% for homes. Condos constitute slightly less than 37% of the dollar volume.
  • Average sales price. Again, negative. Overall, average prices fell 3.65%. Condos fell 17.31% to $367,772 while homes increased 10.8% YoY to $751,244.
  • Days on market. On average the DOM grew to 69 days, but a closer look shows that 60% of all homes sold within 60 days, a performance metric that's been pretty consistent these past few months.
  • Inventory. Based on the month's transaction rates and active listings, there is a 7.32 month supply of condos, an increase of 77.06% from August, while home inventories rose 85.18% to a 9.65 month supply. Wow.

I had to restrain myself from using exclamation points because these are the worst numbers I've seen in the year I've been doing this. So what to make of all of this?

It's quite possible - probable? - that the data reflect the August credit and mortgage meltdown; I suppose October's data may give an indication of whether September was an anomaly or the beginning of a very bad market direction.

The increase in average sales prices for homes is interesting. The $1MM average price for detached homes with 2 or fewer bedrooms is an outlier - these homes tend to sell for less than $400,000. In fact, detached homes as a category were the only group that had positive growth in average sales price; the other two were at best a mixed bag.

Detailed Data

Average Sales Price Trends: 2007

Average Sales Price Trends: Year over Year

Average Sales Price

Dollar Volume

Transaction Volume

Thursday, October 11, 2007

MRIS: September Sales

MRIS released data on sales of existing homes in September yesterday, I'll post my analysis tonight.
 
One data point that leapt out: dollar volume fell 37%.

Wednesday, October 10, 2007

WaPo Discovery: Developers are Car Dealers

Fun article on the front page of WaPo's Monday edition. The title says it all: "Car Dealer Tactics on the New-Home Lot." Basically, developers are doing anything they can to push sheetrock, including auctions. One lucky family was the only bidder on a townhome in Fair Lakes [OK, some of you are probably muttering, "What's lucky about Fair Lakes?" Be nice]. They got the $536,449 property for $429,999, a 19.8% price reduction. Good for them.

I especially like the fact that condos are now being auctioned off. I've quoted developers in an earlier post who were loathe [or said they were] to slash prices because of the negative impact on folks who paid retail or retail plus. Well, at least one developer has looked deep into his heart and said, "I can live with that:"

On Oct. 28, Parkside Alexandria, in partnership with Accelerated Marketing Partners of Boston, will offer 30 condominium units at Parkside at Alexandria during a live auction. Most of the other 348 units were sold the traditional way. "Basically, conventional strategies aren't working," said Jon Gollinger, chief executive of Accelerated Marketing Partners, a real estate marketing firm.

Two-bedroom condos that recently sold for $340,000 will go for a minimum of $225,000. Asked how those people who paid market price for their units would feel about the auction, Gollinger said they're better off having a sold-out building.

"If it's lower than what other people have paid, so be it," he said. "That's a decision we've made for better or for worse."

I hope you folks who just took a 33.8% haircut in your condo's market value are as sanguine about it. At least your building is sold out.

One final note. The winning bidder at Fair Lakes asked the question that always kills me [see the end of previously linked post]:

"The price is very reasonable," said Won-Ki Choi, a federal government worker. Then he turned to a Ryland employee. "Don't you think the price is okay?"

Monday, October 08, 2007

Condo Sales: Saxon Court

My interest in Saxon Court was piqued by an article in the Real Estate section of the Examiner's October 5 issue [sadly, the article isn't on the Examiner's web site]. Samuel Goldreich wrote about a couple who'd done what I've thought of doing: they'd bought two condos and combined them into one unit, #504 at Saxon Court.

Saxon Court was one of the first condo buildings built on the 1400 block of Church Street. The developers repurposed an existing structure for condos and were soon joined by Lofts 14, Lofts 14 Two, Rainbow Lofts, et al. Unfortunately, the new neighbors helped transform that block of Church St into a narrow canyon of condos whose units most likely rarely see the sun. However, it's fair to say that the building was an early contributor to the revitalization of the Logan Circle area, as stated in this 2002 article:

Saxon Court, a unique condominium project at 1440 Church St. NW, includes an industrial-style facade incorporating the existing Church Street garage building, distressed brickwork and walls of glass. Homes here will range from $250,000 to $700,000, with the average two-bedroom home costing between $400,000 and $500,000.

[SNIP]

"In a couple of years, I think the city will look to the P Street area as an example of the perfect restoration project of a neighborhood, with its mix of retail and residential properties creating a true community," Mr. Earle [of PN Hoffman] says. "Our Saxon Court project will create another anchor for the neighborhood on the corner of 14th Street."

As described by another real estate site:

Completed in late 2002, Saxon Court was one of the first conversions of a warehouse into condos on this two-block long street that now houses nothing but upscale condos. Saxon Court is a 46-unit, six-story building with bamboo flooring, granite counters, stainless steel appliances, nine foot ceilings, "industrial" style, stylish furnished roof deck with gas grill, balconies and patios, and underground parking available. Developed by PN Hoffman, located about a 10-minute walk to the Metro. Like many of the old warehouses in the vicinity, this catered to the auto as the "Enby and Saxon service station", which vacated well before the riots of '68 destroyed much of the area.

According to this source, the building was developed by PN Hoffman and SJG Properties at a projected cost of $20MM; it has 85,480 sq ft, 10,000 of that for retail. By my calculation, total sales to-date sum up to $23.95MM, a nice 19.75% return on the investment.

Back to unit #504. I looked at the condo via the link I've provided below. I have to say it's quite spectacular - those folks aren't hurting for money and they've done a very nice job with the unit. But, given that it was a combined unit, I wondered whether it could fetch the list price based on comps in the building. I understand that the renovation performed by the owners would add a certain je ne sais quoi when it comes to truly pinning a value on the property, but I wondered what a comps-based value would be [maybe I could get a job with this TV show].

So here's where the left side of my brain took over. I took the sales of all condos in blocks 0208, 0209, and 0210 [roughly, the area bounded by 14th and 15th St NW on the east and west, and by Q St NW and Rhode Island Ave on the north and south] for the past six months to determine maximum, minimum, and average sales prices per sq ft. I then focused on those units that had 2 beds and 2.5 baths.

The average price / sq ft for all 2 bedroom units was $625.63; those with 2.5 baths sold for $661.58 / sq ft. While the unit's listing states it has 2300 sq ft of space, the District only shows 2167, so I went with the District's data when calculating the comps. Using those figures, unit #504 would be valued at between $1,355,740 and $1,433,634, roughly $150-240K less than they're asking, but a decent bump from the purchase price. It translates to a 4.42-5.89% CAGR for the unit.

Yes, I ignored all the granite and the custom cabinetry and all the other extras added during the unit's renovation. But my limited experience as a real estate agent and home buyer/seller shows me that, eventually, it all comes down to price / sq ft. The rest is je ne sais quoi.

Saxon Court 1440 Church St NW, DC, 20005

Sales Through August 2007

The District has recorded 50 sales of Saxon Court's 46 units through the end of August. Two units, #101 and #503, appear to be owned still by the developer; thus, 44 of 46 units have been sold.

The table below details the average price, average price per square foot, average unit size, and the number of sale for each unit size [1 and 2 bedroom units] at Saxon Court.

The distribution of sales prices on a price per square foot basis is depicted in the chart below.

For example, 26 units sold for prices between $401-$500/sq ft.

Rental / Resale Activity

Six units have been resold since 2002. This building's appraisal data is available so I've been able to calculate price per square foot for each sale.

You may recall I began calculating each sale's CAGR to determine its return to the seller. Each sale beat my informal IRR hurdle rate, i.e., the sale has to return better than a one-year T-bill yielding 4.03%. Each resold unit had been purchased no later than mid-2003.

Of course, the CAGR omits all transaction and carrying cost considerations.

As of October 7, I cannot find any units advertised for rent. Three are listed for sale:

  • MLS DC6536200: Unit #504, listed for $1,595,000. A 2/2.5, advertised as 2300 sq ft although the District's appraisal data states 2167 sq ft. Using the District's data, the list price is $736.04 / sq ft. According to the District, it was purchased in March 2003 for $1,140,456.
  • MLS DC6555662: Unit #603, listed for $995,000. It has 2/2 and 1441 sq ft per the District. Using the District's data, the list price is $690.49 / sq ft. According to the District, it was purchased in June 2005 for $951,000. At this price, the seller will be taking a loss on the sale after an assumed 6% real estate commission is paid.
  • MLS DC6556556: Unit #604, listed for $889,000. It has 2/2 and 1476 sq ft per the District. Using the District's data, the list price is $602.30 / sq ft. According to the District, it was purchased in January 2003 for $619,930.

Friday, October 05, 2007

Stuff is worth what it’s worth

I received a friendly email almost two weeks ago from a fellow who referred me to this interesting article in the NY Times.

“Economists tend to think people are crazy because they won’t sell their houses for less than they paid for them — and people think economists are crazy for thinking things exactly like that,” said Professor Christopher Mayer, director of the Paul Milstein Center for Real Estate at Columbia Business School and an authority on real estate economics.

It's a re-telling of loss aversion disguised as a discussion of people who refuse to lower the asking price for their home. As detailed at this wiser site:

In prospect theory, loss aversion refers to the tendency for people strongly to prefer avoiding losses than acquiring gains. Some studies suggest that losses are as much as twice as psychologically powerful as gains. Loss aversion was first convincingly demonstrated by Amos Tversky and Daniel Kahneman.

[SNIP]

Loss aversion may also explain sunk cost effects.

Loss aversion implies that one who loses $100 will lose more satisfaction than another person will gain satisfaction from a $100 windfall. In marketing, the use of trial periods and rebates try to take advantage of the buyer's tendency to value the good more after he incorporates it in the status quo.

[SNIP]

Loss aversion is a concept of Social Psychology as much as economics. It is not the reality of loss that matters but the perception. This is one place where being good at math doesn't give the answer. Nations have gone to war and "stayed the course" until their doom because of loss aversion. It simply means you refuse to admit you made a mistake.

Oh, I think we're all very familiar with that... Anyway, back to the NY Times.

There have been housing booms in the past and the fellows quoted in the article analyzed the after-effects of Boston's boom in the late 1980s.

From 1989 to 1992, prices in Boston fell sharply, with condominium prices dropping as much as 40 percent. For a great many of those who bought condominiums during that period, selling could be done only at a significant loss. And, basically, many people refused to sell.

Their study, “Loss Aversion and Seller Behavior: Evidence From the Housing Market,” appeared in The Quarterly Journal of Economics in November 2001. The professors [Mayer and David Genesove, a professor of economics at the Hebrew University in Jerusalem] gathered data on almost 6,000 Boston condominium listings from 1991 to 1997 and showed that for essentially identical condominiums, people who had bought at the peak and were facing a loss generally listed their properties for significantly more than those who had bought at a time when prices were lower.

Properties listed above the market price just sat there. In the Boston market over all, sellers listed their properties for an average of 35 percent above the expected sale price, and less than 30 percent of the properties sold in fewer than 180 days. In other words, much of the market went into a deep freeze as many people held out for market prices that no one would reasonably pay.

It'd be fascinating to see how pronounced this behavior is in DC today. OK, so what advice is offered?

... Well, if you are holding out for an above-market price to recoup your losses, perhaps you would do well to hear the advice that Professor Mayer gives his own family members.

“If you want to sell your house then you list it at the market price and you sell it,” he said. “If you don’t really want to sell then don’t put it on the market. But don’t say you want to sell and then set the price so high that you spend the year cleaning up every morning, having people walk through your living room and look in your medicine cabinets and reject you. That’s just painful — and expensive.”

His research offers a simple lesson for everyone out there waiting for a high price to push them back into the black: Get real.

Or, as my hard-charging, Mercedes-driving real estate agent told me when I was selling my house in Dallas: "You don't have a house problem, you have a price problem." Dropped the price and sold it in a month.

Wednesday, October 03, 2007

WaPo 2008 Outlook: Falling Prices

Last Sunday's WaPo published a series of articles on DC's real estate market entitled "Property Values 2007." In "Housing Experts See Further Price Declines in 2008," home and condo prices were discussed. Generally speaking, the consensus appeared to be:

In an industry with more question marks than answers, housing experts are predicting a continuing drop in single-family-house prices in the Washington area through this year and well into 2008, a bigger drop in condominium prices, and slight rises in prices of homes in certain neighborhoods.

"In general, for the metro area, there will be modest declines," said David F. Seiders, an economist with the National Association of Home Builders. "But it depends on the exact locality."

What about the DC condo market?

During the real estate boom earlier this decade, developers put up an unprecedented number of new condominiums.

"There's clearly a glut of condos, particularly in D.C.," said Dean Baker, co-director for the Center for Economic and Policy Research, who is predicting that housing troubles nationally are likely to drag the economy into recession.

Condo prices locally will decline sharply, he said. "I wouldn't be at all surprised to say 20 percent. The time period is very hard to say. You can get meltdowns very quickly."

Will houses fare better?

[Guy] Cecala of Inside Mortgage Finance, who lives in Bethesda, said that even in popular neighborhoods such as his, he expects a decline in single-family-home prices of at least 10 percent over the next year.

Right now, he said, "$45,000 is not a big drop in price" for homes selling at $800,000 or more, and "$100,000 is not a big drop for a million-dollar home."

"I think we're subject to significant price devaluations," he said. "I think anybody who doesn't think we're going to see a drop in housing prices is kidding themselves."

Their advice?

Peter Morici, an economist at the University of Maryland, said that with that [price declines] in mind, "buyers should not feel any sense of urgency to buy a home."

"Sellers would do well to sit tight if they don't have to sell," he said. "Postponing to next spring or summer might pay. Between now and then, it's going to be hard to unload houses."