Double-Digit Annual Price Gains in DC Metro (Again)

Sales fall with typical seasonal pattern, however new contracts spike in condo market

OVERVIEW

The inventory shortage continues in the Washington DC Metro Area housing market as we begin 2013.  Active listings for all property segments remain low, and townhomes have the lowest proportion of listings on record.  The short supply is having an impact on median sales prices, which experienced double-digit growth for the 4^th consecutive month.  Townhomes led in median price growth, up 13.3 percent, a $40,000 gain in value.  Demand remains strong in the market as evidenced by a spike in new contract activity in January.  The condo market had the largest gains in new pending contracts, up 10.3 percent.  Despite the ripe conditions, sellers are still not responding.  New listings for January increased from December, but this is typical for the season.  The total number of new listings is the lowest for any January in over 15 years, a clear indication that sellers remain cautious.  There are a wide range of factors that could be keeping sellers from listing their properties.  Many could not have enough equity at current prices to “trade up” into a larger unit.  Others may have trouble finding a unit to begin with because the inventory is so low.  Economic uncertainty also remains a key issue on the table for many.

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CLOSED SALES

Sales higher than January 2012, Single-family homes lead growth for the first time in 10 months.  Sales increased from January 2012, but low inventory could be muting sales potential.  There were 2,497 sales in January in the Washington DC Metro Area, 6.6 percent higher than January 2012.  Sales fell sharply from last month, down 24.9 percent, but this is in line with seasonal patterns.  While sales numbers have improved from last year, the region is still roughly 400 sales shy of the 10-year January average.  The on-going inventory shortage is likely muting the sales potential as many buyers could be having trouble finding properties to suit their needs.  Single-family detached homes led all property types in year-over-year growth, up 8.8 percent from this time last year.  This is the first time single-family properties have led in year-over-year growth since March 2012.  Sales of condos and townhomes rose 5.4 and 3.9 percent respectively from January 2012.

PRICES

Double-digit price growth across most of the region, low inventory remains a key factor in the growth.  At $343,200, the median home price in the DC Metro Area is 10.7 percent higher than this time last year, the 4th consecutive double-digit increase.  While prices continue to rise over last year, the median fell 4.4 percent from last month, which is typical for this time of year.  Townhomes led all property segments in median price growth, up 13.3 percent from January 2013.  The inventory of townhomes remains the lowest of all segments, and the price-points of these properties make them attractive to the active buyer market.  Both of these factors are driving up the value of townhomes in the region.  Condos also have a similar situation, and this is reflected in the 13.0 percent increase from this time last year.  Prices for single-family homes rose 3.8 percent from January 2012.  Median sales price growth was strong through most of the region, with double-digit growth in all but 2 jurisdictions.  Arlington County was the only jurisdiction in the region with a decline in median sales price, however this is more reflective of the type of properties available than softening demand.  Condos made up 55.1 percent of all sales in the County in January 2013 compared to 48.3 percent this time last year, and these properties tend to have lower price points.

NEW CONTRACTS

Spike in new contract activity, sharpest gains occur in the condo market.  There were 3,916 new contracts signed in January in the DC Metro Area, up 3.0 percent from this time last year.  Compared to last month, new contract activity is up 26.4 percent, well above the 10-year average of 16.9 percent.  The spike in new contracts provides further evidence that demand remains strong in the market.  New contracts on condos rose 10.3 percent from this time last year, the highest gain of all property types.  Condos accounted for 27.0 percent of all new contracts in the Metro Area in January, which is the highest proportion in over 3 years.  A combination of easier financing guidelines, lower price-points, and the demographic composition of the buyer market is likely driving the popularity of condo units in the region.  New contracts for single-family homes rose slightly, up 1.9 percent from January 2012.  New contracts on townhomes fell 2.2 percent.   

INVENTORY

Active listings drop by more than 4,000 from January 2012; lowest proportion of townhome listings on record. There were 6,049 active listings in the DC Metro Area at the end of January, a drop of over 4,000 listings from January 2012.  The inventory shortage continues to impact all property segments, with active listings down over 40 percent across the board.  Townhomes have the lowest supply, and account for only 16.2 percent of all listings in the metro area.  This is the lowest proportion on record for the region, with data available back to 1997.  There were 4,004 new listings entered in January, down 4.2 percent from last year, and the lowest January on record.  There was an influx of over 1,500 new listings from last month, but this is in line with seasonal patterns.  The inventory shortage continues to drive down the median days on market relative to last year, which at 32 days is 25 days lower than January 2012.  The average sale-to-list-price ratio is climbing, up to 96.0 percent from 93.0 percent a year ago.