Sales Slump; Median Sales Prices Hang On
September 8, 2011
(Washington, DC) – So far this year, sales volume in the metropolitan Washington, DC existing home market is outperforming 2008, when the home sales bottomed out in this region, but cannot seem to build a head of steam. The region consists of Loudoun, Montgomery and Prince George’s counties; the cities of Manassas, Manassas Park, and Prince William County (PWAR); Arlington and Fairfax counties, the cities of Alexandria, Fairfax, and Falls Church (NVAR); and the District of Columbia. The table below lists the January through August sales volume for each area for every year since 2006. Sales in the entire region are about 9 percent behind 2010 (recall though that the market was artificially stimulated during the first half of 2010 by the First Time Buyers Credit) but roughly 3 percent higher than at the end of August 2008.
Since 2006, sales volume in Loudoun County and NVAR have consistently declined, falling in 2011 by 21 percent and 22 percent respectively behind the January through August volume in 2006. The highest monthly volume is typically found in NVAR and Montgomery County; these two areas account for 51 percent of the region’s total sales volume in 2011. Both have seen volume declines in the last two years, strongly affecting the region totals.
The District and Virginia suburbs seem to be faring better than the Maryland suburbs. Montgomery County’s January through August sales volume is off by 31 percent compared to 2006 and in Prince George’s County, sales volume has declined 37 percent. The District has the best record with a decline compared to 2006 of only 17 percent. The Virginia suburbs’ declines range from 21 percent in Loudoun County compared to sales in 2006 and 27 percent in PWAR.
With the exception of Prince George’s County, the 2011 January through August median sales price beats both the 2009 and 2010 medians at the same time of year everywhere else in the region. The regional median of $330,000 is $85,000 less than it was at the end of August in 2006 but $20,000 higher than it was two years ago. The largest percentage increase since last year has been in Loudoun where the year-to-date median is now $380,000. NVAR leads the region with a median of $418,000 followed in second place by the District with a 2011 median of $399,900.
It takes longer to sell existing homes this year compared to last throughout the region. Last year the average days on market was 62 days in metro DC; this year the average is 71 days. The largest leap was in PWAR where an extra two weeks was added to the expected time to sell this year. It is interesting that even with the big jump, PWAR still has the lowest average in the region. Prince George’s County’s average exceeded 100 days four of the last eight months resulting in the highest average in the region.
The share of distressed sales so far this year has declined in every area except in Prince George’s County where 63 percent of 2011 sales were either short sales or bank owned properties. The lowest share is found in the District (14 percent) and it is below 30 percent in Loudoun, Montgomery and NVAR.
Given the disappointing sales in metro DC this year, it is encouraging to see that the monthly sales volume actually increased in August compared to July (albeit by only four units). With the exception of Loudoun, the component areas followed the usual trend – steady monthly sales volume declines through February of the following year. Since sales volume was alarmingly low in the second half of 2010 (following the expiration of the First Time Buyers Credit June 30th), it would be nice to see month-over-year increases through the end of 2011. The District and the northern Virginia suburbs did their part but August sales in Montgomery and Prince George’s fell behind August 2010 totals (-5 and -12 percent respectively).
For more detail, please see Metro DC EH Analysis 2011 08.
Washington’s Housing Market Still #1
Case-Shiller revises their monthly Home Price Index for the previous 24-month period as new information becomes available. Although the month-over-year change in Washington, DC’s HPI was revised down for the last three months, the streak remains unbroken. According to the June edition of the S&P/Case-Shiller Home Price Index, Washington, DC again posted the best month-over-year level among the largest housing markets in the country AND chalked up the 25th consecutive month that the HPI in the DC market led the country (183.61). That represents a 4.08 point advance over May (+2.3 percent).
The Index in Chicago did advance on a month-over-month basis at a faster rate, 3.6 percent. But the Index there is a considerably lower 115.61. For the sake of comparison, Detroit’s Index measured 65.42 in June, again posting the lowest HPI in the country.
The S&P/Case-Shiller® Home Price Index measures the residential housing market, tracking changes in the value of the residential real estate market. This Index uses a repeat sales pricing technique that collects data on single-family home resales, capturing resold prices to form sale pairs using a moving three month average. Call Rosemary for an analysis of the marketability of your home.
Sellers in the District and NVAR Accepting Better Offers This Year
The graph below compares the 2010 average close price to original list price ratio in the metro DC region and its component jurisdictions to the 2011 year-do-date average through July.
This indicator reflects the willingness of sellers to accept low offers (if the ratio is below 95 percent) and/or the seller’s ability to accurately price their homes to match current market conditions (if the ratio exceeds 95 percent). Note that this analysis uses the original list price rather than the current list price at sale.
Sellers in the District of Columbia and the NVAR area (Arlington and Fairfax counties, Alexandria, Falls Church and Fairfax cities) have seen improvement in their average close price to original list price ratios this year compared to last. Other areas in the region have declining averages this year.
PWAR (Prince William County and the cities of Manassas and Manassas Park) has the highest average 2011 ratio and is the only area that is above 95.9 percent. On the other hand, Prince George’s County has not only seen the largest decrease since 2010 but it is also the only area with an average below 90 percent.
The ratio for the entire region has declined only slightly with considerable help from the improvement in NVAR, which historically has the highest sales volume in the region. The significant decline in Prince George’s County this year, which ranks third in 2011 sales volume behind second place Montgomery County, led the others in pulling the metro DC average down from 94.5 percent last year to 94.2 percent this year.
It Takes Longer to Sell Homes in 2011 Throughout the Metro DC Region
The graph below compares the 2010 average days on market for the metro DC region and its component jurisdictions to the year-to-date average through July in 2011.
In every case, the 2011 average days on market has increased compared to last year:
- Metro DC + 16.9%
- Loudoun + 25.3%
- Montgomery + 17.4%
- NVAR + 17.1%
- Prince George’s + 8.1%
- PWAR + 34.0%
- District of Columbia + 10.4%
PWAR (Prince William County and the cities of Manassas and Manassas Park) has the lowest 2011 average in the region at only 54 days. However, it has also seen the largest increase from 2010 (40 days, +34 percent). Prince George’s County had the smallest jump compared to last year and it’s the only area with less than a 10 percent increase. However, its 2011 year-to-date average days on market far outpaces the average in other areas in metro DC (81 percent higher than PWAR).