Positive Trend Reverses Declines Since 2004
New sales contracts in 2009 for residential properties were 21% ahead of 2008. The number of properties on the market at the end of 2009 was 25% lower than the end of 2008 — a five month supply. This is a market which most housing economists feel is in balance between buyers and sellers.
Falling property values opened the door for a new group of homebuyers who had been priced out of the market for several years. Average and median sales prices of single family homes, still well below 2008 prices, are affected by the larger than usual percentage of home sales at lower to moderate prices, bringing the average and median down. For condominiums/coops, where sales are about even, the reverse is true, thereby inflating those numbers.
Fueled by huge increases in the low end of the market, sales of single-family homes finished the year 23% ahead of 2008 in number of settlements and 28% ahead in number of total pending sales. As a result, sales of homes priced below $200,000 were up an incredible 262% over last year. Sales of homes between $200,000 and $300,000 had a 32% gain, while homes priced from $400,000 to $600,000 were up 16% over 2008.
In 2009, 57% of sales under $200,000 were foreclosures while only 9% of the homes sold over $200,000 were listed as foreclosures.
Sales of homes priced above $800,000 were down 9% for the year, with sales over $1.5 million down 12%. In the upper brackets, in December pending sales of homes above $1.25 million were up 54% over 2008 and homes between $600,000 and $800,000 saw a 119% increase. Overall, pending sales in December were up 27% from last year.
The inventory of available homes at the beginning of 2010 is 28% below 2008 EOY inventory. The effective inventory was 4.3 months, well below the 2008 year-end number of 7.57 months. Inventory has continued to fall to the point where some neighborhoods and price ranges are suffering from a lack of inventory.
The year ended with the average home price down 17% from 2008 and the median price down 18%.
Condominiums and Cooperatives
Sales of condos and co-ops ended with a 9% gain over 2008. Condo/co-op sales also had a large increase in the lower end of the market, with units priced below $150,000 up 66% from last year. There were also advances in the upper end of the market as sales of units between $800,000 and $1,000,000 jumped 59% over last year, while sales of units over $1.5 million were up 20%. There were also 13% increases in the $300,000 to $400,000 and the $500,000 to $600,000 ranges.
The year ended on a mixed note for condominium and cooperative sales in December. The year ended with 6.26 months of inventory, down from the 9.57 months at the end of 2008.
The total inventory of available units ended the year at the lowest point in four years, 22% below the same point last year. This indicates new condos introduced to the market over the last few years has finally been absorbed, and with very few new condo projects scheduled to come on the market in the next year, the signs are good for a strong 2010 in the DC condo market.
The gains for moderate priced homes were possible because of increased affordability and the availability of financing under the FHA and Fannie Mae/Freddie Mac up to $729,750. Conversely, sales of homes above this limit were affected by the lack of available financing and strict down payment and credit score guidelines.
Looking ahead to the single-family market in 2010, low inventories and increased sales (hopefully combined with increased availability of credit) should bring a moderate increase to home prices for the first time in two years. It is more likely that prices for both homes and condos/co-ops have declined by at least several percentage points this year but that this decline is close to bottoming out.
Price trends always trail those of unit sales by up to a year; so with sales starting to increase it is likely that prices will follow sometime by the middle of next year. But gains for both sales and prices are most likely to be in line with the moderate recovery projected for the overall economy.
F. Hill Slowinski, JD, REALTOR® in DC, MD, and VA
W.C. & A.N. Miller Realtors, A Long & Foster Company
Exclusive Affiliate of Christie’s Great Estates, Top 1% Long & Foster Agents, President’s Club 2008
Consultant, Luxury Real Estate, Sloans & Kenyon Auctioneers and Appraisers
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