Metro DC Housing Analysis 2011 05Posted: June 7, 2011
YTD 2011: Lowest Total Sales Since 2008
June 7, 2011
Contact: Rosemary deButts, REALTOR, MIRM
For immediate release
(Washington, DC) – In the first five months of 2006, total sales in the metropolitan Washington, DC area amounted to 29,312 units. Like the rest of the country, the housing downturn cut sales activity in 2007 and hit the metropolitan Washington, DC market especially hard in 2008 when the total number of existing home sales from January through May only totaled 18,656 units (-36 percent vs. 2006). In 2009 and 2010, metro DC sales advanced from the 2008 low naturally and as a result of the government’s First Time Buyer’s Credit program. But through May 31, 2011, only 20,387 units have sold in the region this year reflecting a 13 percent decline from the same time period in 2010 and a 2 percent decline from January through May 2009. The graph below shows monthly sales activity for the first five months of each year since 2006 here in Washington, DC.
Monthly Sales: Jan-May 2006/2011
The graph also indicates that total unit sales in 2011 reached the lowest point for May over the last six years (4,838 units; +5 percent vs. April but -20 percent vs. May 2010). The First Time Buyer’s Credit program was in full swing last year at this time explaining why the 2011 sales
figure was lower than in 2010. However, sales were expected to outpace 2008 and 2009, at least. It is disheartening that the sales volume in May wasn’t more robust. Following the normal bell curve characteristic of this cyclical industry, sales volume in June will represent the monthly sales peak in 2011. From June to December, sales typically decline on a monthly basis meaning that without a very strong June, sales in 2011 are likely to register below corresponding 2008 levels – below the lowest point of the recession.
Typically, the market is considered to be in equilibrium (there is enough supply to satisfy demand) when the available inventory is between four and five months in this market. The month’s supply of inventory remained unchanged in May at 3.7 months and has not met or exceeded
four months since February. Low inventory is therefore a contributor to stubbornly slow sales.
Sales increased on a month-over-month basis in all local Realtor Associations with the exception of Loudoun and Prince George’s County (-3 and -2 percent vs. April respectively). NVAR saw a 12 percent gain and Washington, DC had an increase of 10 percent compared to
April. All Associations had sales decreases compared to last May though, ranging from -14 percent in Washington, DC to -28 percent in PWAR.
According to Loudoun-based real estate consultant Rosemary deButts, “Existing home sales in the region are struggling this year as are other indicators in the market. For example, median sales prices have not reached corresponding 2010 levels since January.”
The median sales price increased for the second consecutive month across the region in May to reach $311,000, reflecting a 5 percent gain over the revised April median. However, the median in May 2010 was $327,000 (+5 percent vs. May 2011). Washington, DC’s median reached $425,000 in May, up 10 percent from April and + 11 percent from last May. The median in Prince George’s County remained flat at $165,000 but that was a 16 percent decline from May 2010.
On a positive note, the days on market indicator took a dive from 75 days in April to 65 days in May. While this was good news, at 65 days it was still 29 percent higher than the average of 51 days last May. Prince George’s County posted another 100+ average; the May average days on market there was 103 days (down from 108 in April). The homes in PWAR and NVAR sold at the fastest pace in May; 52 and 53 days on average respectively.
With the exception of Montgomery County, all area Associations’ close price to original list price ratio improved in May. The high was 97.2 percent in Washington, DC and the low was 88.4 percent in Prince George’s County. The average across the entire region was 95.2 percent, up from 94.5 in April but down from 95.8 last May.
Average close prices for detached homes advanced to the highest level in the last five months ($494,461); average townhome prices reached the highest point since last July at $348,513; and condominium prices climbed to $296,189 across the region in May.
The share of distressed sales (short sales and foreclosures) receded well below 30 percent for the first time since July 2010 to reach 27 percent in May region-wide. In fact, the share of distressed sales has been below the share in the corresponding month in 2010 every month this year. The range though is wide; 61 percent of sales in Prince George’s County were distressed last month while only 11 percent were distressed in Washington, DC. All Associations reported declines in the share of distressed sales compared to the share in April.
Rosemary deButts further commented, “Metro DC sales activity was discouraging in May…after a discouraging April. Sales and median sales prices, the two most important indicators, are still lagging behind where they should be at this time of year.”