DC Metro Prices Increase in February; Condos Lead in Sales Growth

Low inventory continues to push up median sales prices in all jurisdictions; Subtle signs of a changing inventory pattern begin to emerge with new listings

OVERVIEW

Price growth continues throughout the Washington DC Metro Region, driven by the low inventory of homes for sale. The low inventory is also pushing up the average sale-to-list price ratio, which is now at its highest level since the summer of 2006. While active listings remain at historic lows, new listings are beginning to show signs of what could be a changing pattern. New listings are up over 13 percent across all property segments in the region compared to last month, which is well above the 10-year average change for each segment. This could be an indication that sellers are beginning to respond to the pent-up demand in the market. Sales also continue to improve and are at their highest February-level since 2007. Condos led all property segments in sales growth and now account for the highest proportion of the region’s sales in over five years. Despite the continued sales growth, new contracts are down compared to last year for the third time in four months region-wide, which is being driven by a drop in single-family detached contracts.

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CLOSED SALES

Sales continue to improve, highest February total in six years; Condos lead in growth.  There were 2,684 sales in February in the region, 7.1 percent higher than February 2012, and the highest February total in six years.  The condo market led all property segments in sales growth, up 14.7 percent from this time last year.  Condos accounted for 29.1 of all sales in the DC Metro Region, the highest proportion since January 2008.  This reflects demographic trends in the buyer market with steady demand from first-time homebuyers and empty nesters looking to downsize into smaller units.  Condos also tend to have lower price-points, which are attractive to many, especially with the tightened credit standards and continued economic uncertainty.  FHA financing changes for condos have also played a role and have increased the availability of condo mortgages. Sales of single-family detached properties and townhomes rose 5.3 and 2.4 percent respectively from February 2012.

PRICES

Fifth consecutive month of double-digit price growth for the region, median prices rise in all jurisdictions. At $355,000, the median sale price in the Washington DC Metro Region is 11.7 percent higher than this time last year, the fifth consecutive double-digit gain.  Low inventories of homes for sale continue to put upward pressure on prices around the region.  Single-family detached homes led all property segments in median price growth, up 19.5 percent from February 2012, a $72,000 gain in price.  The median sale price for condos rose 12.8 percent from last year, a gain of $30,000.  The median townhome sales price is up 8.4 percent from February 2012, an increase of $27,000.  All jurisdictions in the region experienced median sales price growth from this time last year, led by Falls Church City at 31.3 percent growth and Fairfax County up 15.9 percent.  The year-to-date median sales price for the region went from $312,000 to $347,000, a gain of 11.2 percent.

NEW CONTRACTS

New contracts drop from last year, driven by declines in single-family detached and townhome contacts. There were 4,277 new contracts in February in the DC Metro Region, down 5.0 percent from this time last year, the sharpest year-over-year drop in nearly two years. New contract activity rose 9.2 percent from last month, but this is in line with seasonal patterns. The decline in new contracts was driven by single-family detached properties and townhomes, which dropped 10.1 percent and 7.0 percent respectively from February 2012. New contracts for these two property segments have been steadily declining since the fall, and are likely the result of a combination of low inventory, and demand in the market for lower price-points. Condos were the only property segment to post year-over-year growth in new contracts, rising 7.8 percent from this time last year.

INVENTORY

Inventory remains historically low, but new listings show signs of improvement across all property segments. There were 6,092 active listings in the DC Metro Region at the end of February, a drop of over 3,700 listings from the previous year.  The inventory shortage continues to impact all property segments, with active listings down around 40 percent across the board relative to last year.  Townhomes have the lowest supply, and account for only 16.5 percent of all listings in the metro area.  There were 4,541 new listings entered in February, down 5.3 percent from February 2012.  However, there was an influx of over 500 new listings from last month, a 13.4 percent increase, which is well above the 10-year average January-to-February increase of 2.9 percent.  The jump in new listings can be seen in all property segments, with increases across all types 13 percent or more from last month.  This could be an early indication of a changing inventory pattern, and seller response to the ripe market.  Despite the jump in new listings, overall inventory remains very low, and continues to drive down the median days on market relative to last year, which at 24 days is 29 days lower than February 2012.  The average sale-to-list price ratio continues to climb, up to 97.1 percent, the highest ratio for the DC Metro Region since June 2006.

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 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.