Third Quarter 2010 Report: Stable Prices and Lower Inventories in Area Market
This has been a frustrating market for many buyers, sellers, and real estate professionals. Buyers in certain price ranges and neighborhoods are finding heavy competition and multiple offers on well-priced homes, while certain sellers are suffering through months on the market without an offer or serious interest.
The third quarter statistics show a 21% decline from Q3 2009; but with the strong first half of the year, year-to-date sales are still up by 14% over 2009. Initially it was unclear whether the expiration of the Federal Tax Credit for First-Time Buyers would have a negative effect on the DC market, but it is now generally acknowledged that the expiration of the tax credit has dampened continuing sales growth.
The sales increase from August to September does give hope of a stronger October and November, as does the state of the inventory. The number of available homes and units had a modest gain of 2% in September, when in past years that increase had often been in the double digits. An even better indicator of the strength of the market is the effective inventory (homes and units for sale divided by number of monthly pending sales).
Pending sales of single-family homes in September rose 17% from August, but trailed September of last year by 12%. Through the third quarter, pending sales of homes under $800,000 were down 25% from last September, while homes over $800,000 were up 83%, an indication that the low-end has suffered due to the expiration of the federal tax credit. In any event, the month certainly saw more success in the upper end of the market.
Through nine months of 2010, sales of single-family homes are up 21% from the same point last year. These gains are across all price categories, with the largest gains seen in homes under $200,000 (up 38%), homes between $700,000 and $800,000 (up 37%) and homes between $1,250,000 and $1,500,000 (also up 37%).
The number of homes for sale rose and the effective inventory fell to 3.82 months. The inventory in the upper brackets continued to grow however, and the $1,500,000 and over range showed a substantially higher 7.68 months. Prices of single-family homes have remained stable compared to last year with average prices for properties settled through September down 1% and median prices virtually even with 2009.
Condominiums and Cooperatives
Pending sales of condominiums and cooperatives were down 15% from last year however, with double-digit losses in many price ranges. There were 4.36 months of inventory at the end of September which puts this market somewhere between a buyers’ market and a market in equilibrium. Pending sales of units between $150,000 to $300,000 fell 54% from last year, while units over $1,250,000 fell 63%. Units priced between $700,000 and $800,000 did manage a 57% gain, while units between $400,000 and $500,000 saw a 32% gain.
Even with the sales pace slowing through the summer, year-to-date sales of condos and co-ops are ahead 2009 by 6%. The largest gains have occurred in the lowest and highest parts of the market. Sales of units priced under $150,000 were up 92% from last year, while units selling over $1,000,000 were up 49%.
There were 5.19 months of inventory, which unlike the single-family side, puts condos/coops closer to a market in equilibrium. Units priced over $800,000 have 10.3 months of inventory, while units priced from $300,000 to $400,000 have only 2.9 months. The sales and inventory numbers show the condo/co-op market trailing the single-family market. Condo/co-op prices have increased for the year while single-family prices have remained flat. Average prices are up 2% for the year compared to 2009. Median prices are up 4%.
With low interest rates seemingly offset by tighter and sometimes inconsistent underwriting guidelines, the prospects for a quick turnaround are dim; but stable prices and low inventories still offer optimism for a solid fall market. There were 4.36 months of inventory at the end of September which puts this market somewhere between a buyers’ market and a market in equilibrium. This is good news locally compared to the most recent national numbers which show a much higher figure of 11.6 months. Prices also reflect the comparative stability of the DC market, with single-family prices virtually even with last year and condo/co-op prices up slightly.
Adapted from a report prepared by Fred Kendrick, with data from the Greater Capital Area Association of REALTORS®
F. Hill Slowinski, JD, REALTOR® in DC, MD, and VA
W.C. & A.N. Miller Realtors, A Long & Foster Company
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