DC Metro Market Impacted by Conforming Loan Limit Change in October

Pending Sales Up from Last Year, but Median Sales Price Dips

Rockville, MD –(November 10, 2011) – The following analysis of the Washington, D.C. Metro Area housing market has been prepared by RealEstate Business Intelligence (RBI), and is based on the October 2011 RBI Pending Home Sales Index™ released today.

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OVERVIEW

October 2011 contract activity in the Washington, D.C. metro area outpaced seasonal patterns, attaining a level that was 18.6% higher than the 5-year October average. There were 4,125 new contracts written in October 2011, 10.4% ahead of the September 2011 total of 3,829. For the past 10 years, new contract activity has averaged a 4.3% increase from September to October.

The median sale price of $320,025 was 5.9% lower than October 2010. This, combined with the marked 23.3% month-over-month decrease in new listings, can partially be attributed to the lower jumbo mortgage limits which took effect October 1. There is evidence that the lowered jumbo mortgage limits may have kept potential high-end sellers out of the market and decreased the number of buyers willing or able to go after the higher priced home segment. New listings were down over 13.2% compared to October 2010 and down 20.3% from the 5-year October average. The attached home segment (townhouses, condos and coops) saw only a slight dip of 1.7% in median sales price year-over-year, with a $285,000 level in October 2011. This is consistent with the fact that the majority of jumbo mortgages are associated with detached properties.

KEY TRENDS

• Pricing trends likely impacted by lower jumbo mortgage limits. The median sales price for October 2011 declined 5.3% to $320,025 from $338,000 the prior month. The October 2011 median sales price represents a 5.9% decrease year-over-year from the $340,000 October 2010 level. This dip exceeds typical seasonal patterns, where prices have averaged only a 0.3% change from September to October, which may show the impact of the reduced jumbo mortgage limits. Differentiating pricing trends by home type supports this assumed causality. The median sales price for townhouses in October 2011 of $320,000 is identical to the October 2010 level. Detached homes, the segment most affected by the reduced limits, had a significant 11.4% year-over-year decrease in median sales price, from $429,000 in October 2010 to $380,000 in October 2011. Another trend supporting this impact is the difference in total sales below $600,000 vs. total sales above $600,000. The number of homes sold in October 2011 under $600,000 was consistent with seasonal patterns, down 3.5% from last month to 2,370 sales (4.7% lower than October 2010). The picture for the number of homes sold above $600,000 is a different story. 445 sales in this category in October 2011 represent a 32.0% decrease from the prior month’s 654 sales and were 23.5% lower than the 582 sales in October 2010. 
• Active inventory down from the 5-year October average. There were 13,953 active listings at the end of October 2011, 25.7% below the 18,782 October 5-year average and down 16.1% from October 2010. There were 4,767 new listings in October 2011, 13.2% lower than the 5,495 listings added in the same month last year. This represents the lowest level of newly listed properties in October since 1999 and shows the DC Metro Area market is continuing to absorb excess inventory.

The RBI Pending Home Sales Index™ is a two-year moving window on the housing market using new pending sales (signed contracts) and median sales price (closed sales). It provides unique insight into the state of the current housing market by measuring the number of new pending sales for each month through the most recent month. The results include new pending sales through and including October 2011. The market area 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.

ABOUT RBI

RealEstate Business Intelligence, LLC (RBI) is a wholly owned subsidiary of MRIS. 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 charts and graphics, 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). Visit rbintel.com or www.facebook.com/rbintel to learn more.