Third Quarter Results Show Prices Stabilizing, Confidence Building
Led by a surge in single-family sales, new contracts for all residential properties jumped a very impressive 38% from last September. Nine months into 2009, combined sales are 13% ahead of those at this point in 2008 and the gap between the top of the market in 2004 and now has narrowed to 28%
There was a slight (2.4%) increase in the number of properties on the market at the end of this September from the same point last year; but with the increase in sales, the effective inventory of homes and units on the market today is down to 3.7 months (higher for condos and co-ops than for single family homes) as compared to 4.9 months in September of 2008.
The average sales price of single family homes, condominiums and cooperatives declined slightly from mid-year but the decline was small enough (in the 2.5% range) to suggest that we may be approaching the bottom.
Single Family Homes
There was a sudden sharp upturn – up 40% from last September — in the number of new single family contracts in September. Year-to-date, new contracts were up 21% from a year ago with these gains largely coming from homes priced under $800,000 (over 80%). Home sales are lagging above $800,000 and particularly those over $1,250,000.
Rather surprisingly, fewer new listings came on the market this September than a year ago and with stronger sales the inventory is down nearly 19% from this time in 2008. Some potential sale homes may have been diverted to the rental market for a year or two (See recent articles at: HillSlowinskiRealEstate.com and HillSlowinski.com). This has left only a 3.4 months supply of homes currently for sale, which is lower than it has been for years.
Average sale prices are presently off 16% from the end of last year but they are down only 1% from mid year. Median prices are down a similar amount from 2008 but they were actually up a fraction from the end of the second quarter in June.
Condominiums and Cooperatives
New contracts on condominiums and cooperatives rose 35% over September of 2008. The largest increases over last year were in the $200,000 to $300,000 range (up 48%) and the $500,000 to $800,000 range (up 52%).
Through nine months of 2009, contract activity on condos and co-ops is up 5% from the same point last year. Most price categories show slight losses or gains from 2008. The most activity for the year has been in the $300,000 to $400,000 range (28% of the market) and that range is ahead of 2008 by 12%.
The inventory of available units at the end-of-September is 13% lower than at the same point last year. The effective inventory actually went up slightly to 4.17 months. The average price of a condo/co-op in the District is even with 2008 prices at this point, while the median price is down 1%.
All of this strongly suggests that the decline in single family home prices is nearing an end, but it will take months, probably into next year, before we begin to see even small gains. With sales apparently on the upswing we can anticipate seeing prices stabilize by late this year or early 2010 but price increases are likely to be modest, at best, after that. Sales were stronger than any other month this year and all the way back to June of 2005. Favorable interest rates and concerns that the first-time buyer subsidy may not be renewed certainly contributed to this, but the strength of this upturn certainly indicates at least some improvement in consumer confidence about our local housing market.
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