DC Metro Home Sales Remain Flat in 2010 as Mortgage Financing Remains a Challenge

RBI Year End Report Indicates Housing Prices Edge 2 Percent Higher as Properties Sell Faster

Rockville, MD –(March 2, 2011) – RBI, the primary source of real estate data, analytics, and business intelligence for real estate professionals in the Mid-Atlantic region, today released its 2010 year end statistical analysis for the Washington, DC metro housing market. The market area includes: Washington, DC; Montgomery County; Prince George’s County; Alexandria City; Arlington County; Fairfax County; Fairfax City; and Falls Church City.

“After a roller coaster ride in home sales caused by the federal homebuyers tax credit, the Washington, DC metro area housing market ended the year with about the same number of sales for 2010 as occurred in 2009,” said noted housing market expert and RBI analyst Jonathan Miller.  “Despite improved affordability from record low mortgage rates and housing prices below the peak levels of a few years ago, conservative mortgage underwriting, as evidenced by the 35 percent year-over-year increase in cash purchases, continues to keep the housing market improvement in check.”

Key year end housing metrics:

Based on the figures released by RBI, Miller identifies the key characteristics of Washington, DC metro area housing market.  The four impact trends are:

• Cash purchases jumped 35 percent as mortgage underwriting remains tight.  Evidence of the difficulty in obtaining mortgage financing was the surge in cash purchases.  There were 7,258 cash sales comprising 16.4 percent of all purchases in 2010, up from 5,376 cash sales comprising 12.1 percent of all purchases in 2009.  Conventional and FHA financing comprised 43.3 percent and 31.5 percent respectively, which led the way in 2010 but both categories lost market share from 2009.

• Despite federal stimulus directed towards the housing market, unit sales were unchanged in 2010.  There were 44,362 units sold in the Washington, DC metro housing market, essentially unchanged from the 2009 total of 44,264. Tight mortgage underwriting for home purchasers was the primary reason home sales saw nominal year over year improvement despite the federal homebuyers tax credit and mortgage rates reaching historic lows. Unit sales in 2010 were 41.1 percent below the recent peak of 75,298 units set in 2004.  However, the record levels set in the middle of the decade are best characterized as an anomaly caused by the global credit boom.

• Detached housing continued to gain market share.  Since housing prices peaked in 2007 and the credit crunch began the market share for detached houses in the region has continued to rise.  Market share for detached housing reached a decade low of 42.5 percent of all sales in 2007, then rising each year, reaching 48.6 percent in 2010.  Unit sales for detached housing increased 1.9 percent to 21,564 in 2010 compared to the prior year as attached homes fell 1.3 percent over the same period.  Housing prices for both categories edged higher over the same period.

• Homes sold three weeks faster than the prior year due to less competition.  With a decline in active listings at year end compared to the prior year, there were fewer homes for active listings to compete with.  The average days on market—the number of days from original list date to contract date—was 65 days in 2010, more than 3 weeks faster than the 88 day average of 2009 but still slower than the 48 day annual average of the past decade.  The decline in active inventory reduced the listing discount—the percent difference between the original list price and the sold price— from 7.6 percent in 2009 to 5.8 percent in 2010.

2010 Year End detailed reports for all counties in the RBI region can be found at www.rbintel.com/statistics. RBI is the only company in the Mid-Atlantic region that provides timely, online access to statistical information directly from the Multiple Listing Service (MLS).

Miller is available for comment on this year’s RBI data and market results.  Interview requests can be sent to Tina McCormack at tina@cfoxcommunications.com or 301-585-5034.