Metro DC Housing Analysis 2010 09Posted: October 11, 2010
Metro DC Housing Market Undersupplied
October 10, 2010, 2010
Contact: Rosemary deButts, REALTOR, MIRM
(Washington, DC) – The metro Washington, DC market is assumed to be in equilibrium (there is enough supply to satisfy demand) when the month’s supply of inventory is between four and five months. Based on the active listings as of October 8, 2010, the metro DC area had 3.8 months supply of available “for sale” inventory. Although this is a highly volatile indictor, it suggests that the market was undersupplied and may partially explain the larger than expected decrease in total sales during September. PWAR, which was particularly plagued by distressed sales over the last few years, had the lowest available supply at 2.4 months and was again significantly undersupplied. Washington, DC had the highest supply in September, 4.9 months, well within established equilibrium parameters.
Following expected cyclical trends, existing home sales declined in the metropolitan Washington, DC area in September. However, preliminary total sales figures declined to a larger degree than expected, -14.6 percent (4,090 units) compared to revised results from August. September was the third consecutive month that total unit sales fell below the corresponding month in 2009 following four consecutive months of month-over-year increases.
As of September, annualized 2010 sales in metro DC total 58,092 units, 2.1 percent below 2009 total sales. New pending sales (listings marked “contract” this month and which may or may not close in the future) ended September at 2,484 units (-10.4 percent month-over-month).
Prices slipped but are still better than last year. Again in September and for the ninth consecutive month, the median price for existing home sales in the metropolitan Washington, DC area ($322,000) exceeded the corresponding month in 2009. Revised August results showed a 4.6 percent increase and the median in September was 2.2 percent higher than it was at this time last year. The year-to-date median sales price declined to $319,778 in September, 4.7 percent higher than the 2009 median. All of the core associations in the metro area reported a month-over-month decrease in September’s median sales price; the smallest decrease was in Loudoun County (-8.3 percent) and the largest was in the NVAR area (-19.9 percent).
According to Virginia-based real estate consultant Rosemary deButts, “Existing home sales activity in the third quarter of 2009 was much stronger than in 2010, a disturbing trend given the positive comparison in the first half of the year. However, median sales prices and several other industry indicators remain higher than at any time last year.”
For example, the year-to-date average days on market indicator was less than 65 days for the last six consecutive months; a feat reached only once in all of 2009. Compare the 2010 average of 60 days to the 2009 average of 85 days. The highest average was found in Prince George’s County (90 days) and the lowest was in PWAR (41 days) during September. In fact, Prince George’s has had the highest average every month this year. Conversely, PWAR has consistently had the lowest.
The average close price to original list price ratio may reflect two things: the seller’s ability to accurately price their homes to match market conditions and/or their willingness to negotiate price. The ratio consistently exceeded 94 percent since February in metro DC. Compare that to the four year low of 89.8 percent in February 2009. PWAR posted the highest ratio in September of 96.2 percent while the lowest ratio was found in Prince George’s County (91.1 percent).
Short sales and foreclosures (distressed sales) still represent about one third of the total sales in the nation’s capital. After reaching a high of 45.5 percent of total sales in January 2010, the share of distressed was 32.4 percent in September, the sixth consecutive month below or equal to 35 percent. Again in September, Prince George’s County had the highest share of distressed sales, 60.4 percent. Washington, DC had the lowest, 17.5 percent.
Rosemary deButts further commented, “The decline in sales is a direct result of a lack of available inventory in metro DC. Other housing market indicators suggest a stable market but the strong recovery promised in the first half of the year has been stifled by low supply in recent months.” ###
For more information and historical context, please visit www.housinganalyst.net. In this analysis, data for Loudoun, Montgomery and Prince George’s counties as well as Washington, DC are grouped individually. Data for Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church are grouped as the Northern Virginia Association of Realtors (NVAR). Likewise, data for Prince William County along with the cities of Manassas and Manassas Park constitute the Prince William Association of Realtors (PWAR).
Rosemary deButts is a consultant in the home building industry and a REALTOR® associated with 1757 Real Estate Company in Leesburg, Virginia. She serves as the housing analyst for the Virginia Association of REALTORS® and is certified by the National Association of REALTORS® as a Short Sales and Foreclosure Resource. With a long career in the housing industry, she is also a Member, Institute of Residential Marketing (MIRM), a prestigious new homes marketing designation issued by the National Association of Home Builders.