Loudoun County Housing Update: 2011 08Posted: September 9, 2011
Steady but LOW Supply of Listings
The number of active listings in Loudoun County is a constantly fluctuating number as real estate agents add new listings, indicate they have contracts or are sold or they may expire or be withdrawn from the market at any time. Therefore, the number of active listings reported for any given month is a “snapshot” of activity at roughly the same time every month. The graph below illustrates the active listings (excluding rentals) for every month since January 2010. You will immediately notice that the number ranged between 1,500 and 1,560 for the last five consecutive months.
The housing market is a highly cyclical industry but typically follows a bell curve. Sales and listings are typically lowest in January and February with a steady increase from March to June (or July) followed by a steady monthly decline through the remainder of the year. The fact that the number of listings in 2011 has been almost unchanged since April is remarkable and clearly out of the ordinary.
The monthly average of active listings in Loudoun this year is 1,423 per month. That is 10 percent behind the monthly average in 2010, 21 percent behind the 2009 average and a whopping 52 percent behind the 2008 monthly average. Fewer listings translates to fewer sales; 2011 sales in Loudoun are 5 percent behind 2010, 9 percent behind 2009 sales and 13 percent behind 2008 sales (through August of each year).
A shortage of listings creates supply constraints. The graph below shows the month’s supply of inventory (active listings divided by monthly sales) in 2010 compared to 2011. With the exception January and March, the month’s supply of inventory in 2011 was less than the comparable month in 2010. And while the inventory increased in the third quarter of 2010, it’s declining so far in 2011. A market is typically considered to be in equilibrium in this market (there is enough supply to satisfy demand) when the month’s supply of inventory is four to five months. With a 2011 monthly average of only 3.6 months, the market continues to be undersupplied.
But that’s not the whole story. The market is significantly undersupplied in Eastern Loudoun, slightly undersupplied in Leesburg but oversupplied in Western Loudoun. The 2011 average month’s supply of inventory in Eastern Loudoun is 2.7 months, the average in Leesburg is 3.9 months and the average in Western Loudoun is 8 months.
Other preliminary August results include:
- Uncharacteristically, sales volume increased in August, albeit by only four units. At 465 units, sales improved .9 percent compared to July and 7 percent compared to last August;
- So far in 2011, 65 percent of Loudoun’s sales were located in Eastern Loudoun, 25 percent were in Leesburg, and 12 percent were in Western Loudoun.
- The preliminary August median sales price was $387,210, +2 percent vs. the August 2010 median. The year-to-date median is $380,000, 6 percent higher than the 2010 median;
- The average seller contribution jumped 32 percent from July to $5,084 making the 2011 average $3,859;
- The average days on market was 56 days resulting in a new 2011 average of 51 days. Compare that to the 2010 average of 43 days. There is a wide discrepancy by area – the August average in Eastern Loudoun was 45 days and it was 47 days in Leesburg but Western Loudoun’s monthly average days on market reached 138 days in August;
- In 2011, 55 percent of sales were detached homes, 39 percent were attached homes and 6 percent were condominiums;
- The average close price for detached homes was $529,224 in August;
- The average close price for attached homes was $328,460;
- The average close price for condominiums was $200,268;
- Pending sales continued to decline. The number of new pending listings fell from 473 in June to 377 in July (-96 units) and again to 340 (-37 units) in August;
- For the fifth consecutive month, the average close price to original list price ratio exceeded 95 percent; and
- The share of distressed sales advanced from 20 percent in July to 22 percent in August. Last August the share was 28 percent.
For more detail on the Loudoun County housing market, please see: Loudoun County Housing Analysis 2011 08