Diminishing supply continues
Rockville, MD – (June 11, 2012) – The following analysis of the Washington, D.C. Metro Area housing market has been prepared by RealEstate Business Intelligence (RBI), and is based on May 2012 MRIS listing housing data.
Inventory in the Washington region continues to shrink. In May, the level of active listings was at its lowest May-level since 2005. Additionally, the number of distressed property listings (foreclosures and short sales) is at the lowest level since MRIS began tracking this metric in April 2009. The reduction in supply is putting upward pressure on prices, as evidenced by the 11 percent rise in the median sales price from May 2011. This price gain reflects the fourth consecutive year-over-year gain, and the second consecutive double-digit increase for home prices in the region. These trends, coupled with decreasing Days on Market (average down 17.6 percent from May 2011), and an increasing sale-to-list price ratio (up 1.9 percent from May 2011) signal that it is a Seller’s market heading into the summer months.
Sales volumes in the Washington, DC Metro Area continue to improve relative to 2011 levels. The 4,478 closed sales in May represent a 14.3 percent gain from this time last year. This is the second straight month of volume gains compared to a year ago. Most of the growth is being driven by sales of detached homes, which at 2,342 units is 20.9 percent higher than May 2011. Townhome sales edged up a mere 0.5 percent from May 2011. Condos also fared well in May with 1,062 units sold, a 16.6 percent increase from last year.
The number of foreclosure sales is down 47.3 percent compared to last May, the 25th straight year-over-year decline for this category. The 307 foreclosure sales in May represent only 6.9 percent of all sales in the region, the lowest proportion since MRIS began tracking distressed listings in April 2009. Short sales on the other hand are up 21.2 percent, the 7th year-over-year increase in the past eight months. Much of this shift from foreclosure to short sale reflects a change in how banks deal with their distressed assets.
Home prices continue to gain momentum throughout the region. The median sale price in the DC Metro Area is $392,500, up 11 percent from May 2011. This is the fourth consecutive year-over-year increase and the second straight month of double-digit price growth metro-wide. Pricing in all jurisdictions within the metro area increased relative to May 2011. Year-to-date medians are also on the rise, up 7.7 percent to $350,000 for the metro area.
The median sale price of foreclosed properties rose a modest 1.5 percent compared to May 2011, but short sale prices decreased 5.3 percent, the 16th consecutive year-over-year decrease. The persistent decline in short sale pricing indicates that many banks have an increasing loss tolerance on these properties. The median sale price for short sales in the region was $195,000 in May; foreclosures came in at $160,000. The $439,000 median sale price for traditional listings, or those not involving short sale or foreclosure, was up 2.1 percent year-over-year.
Newly signed contracts rose slightly with condos posting the strongest growth. New contract activity in the Washington market continues on an upward trajectory, as the region posted its 13th consecutive year-over-year increase in new contracts. In total, 5,593 contracts were signed in May, a 1.6 percent rise from the previous year. The condo segment of the market grew the most with 1,362 new contracts in May, 100 more than May 2011, a 7.9 percent gain. Roughly half of the new contracts are detached homes, a quarter are attached townhomes, and a quarter are condos.
The shift in closed sales from foreclosures to short sales is likely to continue as the same dynamic can be observed in the new contract data. There were 1,107 new short sale contracts signed in May, up 5.8 percent from the previous year. Conversely, new foreclosure contracts were down 43.8 percent, the 10th consecutive year-over-year decline. Regardless of the shift, bank-mediated activity continues to trend downward, representing 26.7 percent of all new contracts in May, down from 31.5 percent last year.
Declines in the region’s active listings persist, the lowest May level since 2005. There were 10,510 active listings in the DC Metro Area at the end of May, a 32.4 percent decline from May 2011. This is the 15th consecutive year-over-year inventory decline. The shrinking supply indicates a stabilizing market, as sales have increased and listings have declined. As interest rates remain low and demand rises, the low supply will continue to put upward pressure on prices. This price growth could entice hesitant sellers to enter the market. The low supply also indicates that many potential sellers may still be wary of their financial situations, and are more comfortable remaining in their current homes. A similar trend can be observed with new listings. In May, 6,084 new listings entered the market, which is 6.7 percent below the previous year and the 11th year-over-year decline in new listings in the past twelve months.
In line with the overall supply trends, the quantity of distressed property listings continues to drop. The decline in this segment is more pronounced, as active foreclosure listings are down a staggering 69.5 percent compared to last year, and the inventory of short sales is 53.7 percent lower than last year. At 15.8 percent, the proportion of active listings that are classified as distressed properties is at its lowest level since MRIS began tracking them in April 2009.
the RBI Metro Housing Market Update
The DC Metro Area Housing Market Update provides unique insights into the state of the current housing market by measuring the number of new pending sales, trends by home characteristics, and key indicators through the most recent month compiled directly from Multiple Listing Service (MLS) data in RBI’s proprietary database. The bulk of this report’s content is readily available, down to the ZIP code level of granularity, via interactive charts and reports offered via rbiEXPERT, a premium subscription service offered to real estate professionals interested in growing their business with the help of industry-leading and user-friendly analytics. The DC Metro Area housing market includes: Washington, D.C., Montgomery County and Prince George’s County in Maryland, and Alexandria City, Arlington County, Fairfax County, Fairfax City, and Falls Church City in Virginia.