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Washington's big housing problem: Not enough sellers

Wednesday - 4/23/2014, 1:55pm  ET

Tight inventory continues to push housing prices up in the Washington market, and any relief will come from new construction more than from existing homes being sold.

Real estate firm Redfin says just 0.56 percent of existing homes in the Washington metro are currently for sale, among the lowest sale-to-inventory rates in the nation.

There are several reasons holding back existing inventory, including the fact that 19.8 percent of homeowners in Washington have low equity, owing more than 80 percent of their home's value and are not in a good financial position to sell as a result.

Redfin says another 16.4 percent of Washington-area homeowners are locked in at historically low mortgage rates and aren't motivated to sell because of rising rates and prices.

In addition, nearly 10 percent of the existing homes and condos in the Washington market were purchased less than seven years ago, and homes typically sell seven years or more after they were bought.

A report from Long & Foster Real Estate says active inventory in the District was down 12 percent from a year ago.

What does tight inventory mean for buyers? More competition.

Redfin says 59.7 percent of offers written in the Washington area by its agents faced competing bids in March.

Long & Foster says sellers last month got, on average,  more than list price in 8 of the 15 D.C. neighborhoods it tracks.

© 2014 American City Business Journals, Inc.