Is the DC Metro Market "There" Yet?

Posted on October 01, 2013 by Corey Hart



The New York Times editorial concerning the housing recovery has received lots of national attention, and for good reason.  The editorial board raises important questions regarding just how much the recent improvements in the national housing market have resulted from buyers collective fear of looming interest rate hikes.  Hard to say, but this has certainly factored into some of the recent activity both nationally and locally.  It could be one of the main drivers behind the (welcome) increase in new listings over the last 5 months in the DC Metro market, which we elaborate upon in this recent blog post.

Another point made by the NY Times editorial hasn't reared its head in the DC Metro least not yet. 

Similarly, home prices have gone up, rising 12.4 percent from July 2012 to July 2013. But month-to-month price gains have slowed considerably the last several months. This suggests that prices have begun to plateau, even as millions of homeowners who owe more on their mortgages than their homes are worth are counting on rising prices to restore their equity. [emphasis added]

The 10-year average July-to-August month-to-month price change is -2.5% for the DC Metro area.  The 2013 July-to-August percent change: -2.4%. We'll keep an eye on this indicator when the September stats are reported on the 10th, but don't be surprised if there is a month-to-month decrease again: The 10-year average August-to-September median sale price change is -5.2%.

While we don't anticipate the double-digit year-over-year gains to continue indefinitely, RBI makes it a point to compare changes on this annual basis to get the seasonal influence out of the equation. Hover over the recent months below to get a sense of how prices have been climbing on an annual basis for some time now.


The bottom line is that the DC Metro market has been in full recovery for some time now, the key difference in the trends of this August vs. last August

a. New Listings are at a 5-year August peak, while they were at a 5-year August minimum in 2012

b. Closed sales are at a 5-year peak (last August showed improvement, but wasn't at a respective peak at that time)

Check out the gauges below to get a better sense of how some trends are different this year and how some have remained the same. 

Note the difference between Aug 2012 (on the left) and Aug 2013. New Listings in August were near the 5-year August max last month and well above the 5-year average. By contrast, new listings were at a 5-year August minimum just last year.

The number of sales in August 2013 represented the peak August in the last 5 years. An improvement over August 2012, though the area has seen consistent sales gains since early last year.

The median sale price is at a 5-year August peak, a similar trend to what the DC Metro area experienced last August.

Half the homes sold in August were on the market 14 days or less, well below the 5-year August average...and 12 fewer days than the Median DOM last August. Last year was similarly at a 5-year peak, though.


So, are we there yet ("we" being DC Metro area residents and "there" a healthy, sustained housing recovery)?

We can't definitively say yes, especially considering the valid points raised in the NY Times editorial about rising interest rates and the struggles of 25- to 34-year-olds (the traditiona first-time and trade-up homebuyers) in this economy. The DC Metro job market remains strong, though, compared to national employment trends, which has undoubtedly been the biggest factor in the consistent improvement in the local housing market since 2009. DC Metro residents might not be "there" yet, but we started heading "there" sooner than most other regions since the Recession and we should be in better shape should prices begin to soften.

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