DC Metro area sees highest October-level home prices in nine years

New contracts miss last year's mark by two percent, increase for non-distressed property contracts

OVERVIEW

The housing market trends in October in the Washington DC Metro Area were little changed from prior months.  The number of closed sales in the region fell 2.8 percent from the October 2013 level, but the decline was driven entirely by a decrease in distressed property sales.  Sales of distressed properties (foreclosures and short sales) have been decreasing since mid-2010 and declined 21.5 percent between October 2013 and October 2014.  Non-distressed sales in October were actually unchanged from last year.  New pending contracts also saw an overall decrease, but as with closed sales, the decline was largely the result of fewer contracts for distressed properties.  New contracts for distressed properties were 16.2 percent below the October 2013 level, while those for non-distressed homes increased by 1.4 percent. 

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The median sales price for the region increased 5.3 percent from October 2013 with gains in every jurisdiction.  Active listings continue to rise but are only 46.0 percent of their peak-level of 2007.  The median days-on-market increased, marking the ninth month of year-over-year increases.  But homes continue to sell more quickly than the five-year and 10-year October averages.

PRICES

Price gains in all jurisdictions; highest October-level regional median sales price in nine years.  At $400,000, the median sales price for the region rose 5.3 percent, or by $20,000, from last October.  This is the highest October-level since 2005 and the highest year-over-year percent increase in eight months.  The median sales price for single-family detached homes increased 5.1 percent, or by $23,520, from last year to $480,000.  Condo properties had a median sales price that was 2.9 percent, or $8,500, higher than last year.  The median sales price for townhomes increased 2.1 percent, or by $8,000.

Every jurisdiction in the region had an increase in its median sales price as compared to last year. Of the jurisdictions, Fairfax City had the highest growth in in median sale price and rose 14.0 percent.  But with 14 closed sales in October, the city’s median sales price is sensitive to changes in the composition of the sales.  The median sales price for Prince George’s County increased 13.0 percent from October 2013.  The County has now had 32 consecutive year-over-year increases in median sales price and reached the highest October-level since 2008. While its year-to-date median sales price of $220,000 than the regional level, Prince George’s County has seen the highest appreciation compared to last year (+12.8 percent). Alexandria is the only jurisdiction with a lower year-to-date median sales price than 2013, with a modest 2.1 percent decrease.

CLOSED SALES

Continued year-over-year declines; stronger than average month-over-month growth.  In October, closed sales in the DC Metro area decreased 2.8 percent, or by 108 sales, from last year to 3,784 sales.  This is the tenth month in a row of year-over-year declines, but closed sales were higher than in October of 2010, 2011 and 2012. Closed sales of condo properties increased by a modest 0.7 percent from this time last year, the only property segment with sales gains.  The number of closed sales of single-family detached homes decreased 3.4 percent.  Townhomes had the sharpest decrease in closed sales, falling 5.5 percent from the October 2013 level.  As compared to last month, the number of sales increased 6.0 percent, bucking the seasonal pattern typically seen between September and October, when closed sales usually begin to slow.  The 10-year average September to October change is -2.4 percent. 

The 3,387 non-distressed sales was exactly the same as the number sold in October 2013, while distressed sales dropped 21.5 percent, due entirely to continued double-digit decreases in short sales.  Foreclosures actually saw a modest 2.1 percent gain with 193 closed sales, but the 204 closed short sales were 35.6 percent below the October 2013 level. Distressed sales accounted for 10.5 percent of all sales, down from a 13.0 percent share in October 2013.

NEW CONTRACTS

11^th month in a row of year-over-year declines; growth in non-distressed contract activity.  There were 4,446 new contracts signed in October, which is 2.0 percent fewer than last year.  New contracts have been below their prior year level for 11 consecutive months. Among the property segments, the number of new contracts for condo properties had the steepest decline, dropping 3.4 percent from October 2013.  New contracts for townhomes decreased 2.4 percent while those for single-family detached homes decreased 1.0 percent.  Compared to September, new contracts increased 4.6 percent, which is in line with the ten-year average September to October increase of 4.3 percent.

The 3,711 new contracts signed for non-distressed properties were 1.4 percent more than the number signed in October 2013, the second month in a row with gains. New contracts for foreclosures had the largest increase, rising 24.7 percent and accounting for 7.0 percent of new contracts compared to 5.5 percent in October 2013. New short sale contracts were down more than 20 percent for the 23^rd consecutive month, dropping 32.6 percent and the main driver in the 16.2 percent dip for the distressed category.

The rate at which contracts for short sales “fall through” continues to keep a lid on their proportion of closed sales. Though they account for more than one in four listings currently under contract (ignoring the actual month in which the contracts were signed), short sale contracts have an average fallout rate of 58 percent this year.  The average time under contract for those short sales that actually closed in October is 150 days, compared to 38 days for non-distressed sales and 50 days for foreclosures. Thus, whether the number of new short sale contracts had been up or down in October (or August or September for that matter), it is of minimal consequence to the sales trends to be reported in the months ahead.

INVENTORY

13^th consecutive month of year-over-year inventory gains; region remains a seller’s market.  New listings increased 6.4 percent from last year and the consistent gains in new seller activity continue to bolster available inventory.  This is the eighth consecutive month of year-over-year gains in new sellers entering the market, and the highest October-total in five years.  New listings of townhomes increased 8.4 percent compared to last October, leading all property segments in year-over-year growth.  New listings for single-family detached homes increased 8.0 percent and new listings for condo properties increased 1.7 percent.

There were 11,919 active listings at month’s end, 28.8 percent more than in October 2013.  Active listings have now increased from the prior year for 13 months in a row.  Of the property segments, active listings for townhomes had the largest growth from last year, rising 34.8 percent.  Active condo inventory is 27.6 percent higher and there are 27.3 percent more single-family detached listings than October 2013. 

While inventory has grown considerably over the course of 2014 and now stands at the highest October-level since the 13,953 listings in October 2011, it remains 14.6 percent below that previous mark. More importantly, the steady improvement in the “health” of the market is obvious when contrasting the distressed composition of active inventory now versus the same point three years ago. Only one out of ten current listings (10.9 percent) is a distressed property, while one out of four listings (25.5 percent) in October 2011 was a short sale or foreclosure. 

Though the number of current listings represents 3.2 months of supply, based on the recent 12-month sales pace, and this is more balanced than the 2.4-month level in October 2013, the region remains a seller’s market.  The median days-on-market is now 24.  While this is eight days more than in October 2013, it is shorter than the 10-year average October-level of 37 days. Typical seasonal patterns suggest homes will take longer to sell in the winter months ahead, but supply is sufficiently tight in the DC Metro area for listings to continue seeing contracts more quickly than other markets in the country.

About 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 subdivision level, via interactive charts and reports offered via SmartCharts Pro, a premium service offered to real estate professionals interested in growing their business with the help of industry-leading 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. 

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RealEstate Business Intelligence, LLC (RBI) is a primary source of real estate data, analytics and business intelligence for real estate professionals with business interests in the Mid-Atlantic region. The full monthly data report for all jurisdictions in the MRIS region, along with interactive charts and graphics, can be found at www.getsmartcharts.com.

About the Center for Regional Analysis at George Mason University

The Center for Regional Analysis conducts research and analytical studies on economic, fiscal, demographic, housing, and social and policy issues related to the current and future growth of the Virginia, Maryland, and DC areas. Through its range of research and programs — major economic impact studies, economic forecasts, fiscal analyses, conferences and seminars, publications, information services, and data products — the Center’s activities strengthen decision-making by businesses, governments, and institutions throughout the Greater Washington region.  Visit http://cra.gmu.edu to learn more.