Low Inventory, Stable Prices, and Feeling the Worst Is Behind Us
The Washington, DC real estate market had an exceptional first half of 2010 with combined sales of single-family homes, condominiums, and cooperatives up 36% at the end of the second quarter. That pace did not continue and the increase dwindled to 3% by the end of December.
The single-family market ended the year in much stronger position than the condo/co-op market with an 11% increase sales and just over 4 months worth of inventory. Condo/co-op sales ended with a 6% loss and over 6 months of inventory. Nevertheless, property values still managed to rise for both homes and condo-co-op units.
Overall, this was still the third consecutive year of positive sales growth, made more remarkable by the negative factors faced in the market place.
Single Family Homes
At the end of 2010, year-to-date sales of single-family homes were up 11% over the same point in 2009. The largest year-over-year increases came in the $700,000 to $900,000 range (up 27%) and the $1 million to $1.5 million range (up 33%), and single-family gains were seen across almost all price categories. Only the $600,000 to $700,000 and the $900,000 to $1 million ranges registered small losses — 3% and 2% respectively.
At the end of 2010, there was 4.03 months supply of single-family inventory available. Inventory of homes was remarkably stable throughout the year, varying between a low of 2.31 months and a high of 4.26 months. Only homes priced over $1.25 million saw a substantially higher inventory, 10 months worth, but that is not unusual for that price range. The number of available homes typically drops at the end of the year, and a majority of these homes is likely to come back on the market in the first quarter of 2011.
Average and median prices of single-family homes rose slightly in 2010 compared to double-digit declines in 2009. The average home price was up 2% while the median was up 3%. With low inventories to start 2011, consistent sales numbers should provide stability or similar increases throughout 2011.
Condominiums and Cooperatives
Sales of condominium/cooperative units dropped overall by 6% by the end of 2010. Only the highest and lowest price ranges saw double-digit increases for the year, with sales of units priced under $150,000 up 55% and units over $1 million up by 46% for 2010 over 2009.
Inventory of available condominium and co-op units fell 20% in December to the lowest point of the year. Inventory is up 4% at the end of 2010 over 2009 with the largest increase in the $200,000 to $300,000 range while the number of units on the market between $700,000 and $1 million fell 27%. An increase in the more affordable $200,000-300,000 range is considered a positive trend.
At the end of 2010, there was 6.37 months of condo/co-op inventory, which establishes a market that is more in balance than being a buyer’s or seller’s market. The spring saw this number dip as low at 3.13 months.
There are several local and national issues that this area will have to overcome in 2011 to continue its upward movement in sales and prices – the potential downsizing in federal employees, lack of available credit for some buyers, reforms in Fannie Mae and Freddie Mac, and threats to the Mortgage Interest Deduction.
Surprisingly, average and median sales prices ended the year both up by 4% in 2010 over 2009. On paper, the condo/co-op market was spared the drop in prices that was seen on the single-family side in 2009, but the lackluster end to 2010 might be an indicator of falling condo/co-op prices to come — at least in the first half of 2011.
If some of these numbers seem disappointing, it is only because of the expectations that come with being in a very robust market like Washington, DC. The most recent statistics from the National Association of Realtors® show a decline in sales of 28% nationwide, 9.5 months of inventory and the prediction from many experts of worse conditions in 2011.
The fact is that in the Washington, DC market, we have started 2011 with low inventory, stable prices, and the feeling on the street that the worst is behind us.
Adapted from “DC Housing Report” by Fred Kendrick; 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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