Today we’re going to take a look at the overall market in the DC metro area for the first quarter of 2019. This area includes Montgomery, Prince Georges, and Fairfax Counties, Falls Church City, Arlington, Alexandria and of course, the District of Columbia. These are very broad statistics, and as you know, real estate is a hyper-local business. However, it’s always good to step back and get a sense of what’s going on at the broad market level.
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So let’s take a quick look. I should say that all of these numbers are from Bright MLS, which is the database that most agents use, and where the majority of the real estate websites derive their information and data from, so we are going straight to the source.
We’ll start with a chart that I really like, one that shows the balance between supply and demand. First, we’ll look at the supply side. As you can see, total active listings have moved up slightly and new listings are up sharply. This is part of the normal seasonal cycle. We are heading into the spring market, which is the busiest time of year. Everyone wants to put their house on the market when the azaleas are in bloom. On the demand side, new pending‘s are up substantially as well. Not quite as large an increase as new listings, but keeping pace with them so far.
An interesting way to look at it to get a broader historical perspective is to look at the change year-over-year. Here you can see on the supply side, the total number of active listings are down vs 2018, almost 10%. New listings are also down year-over-year as of March by almost 4%. Whereas pendings, which are the demand-side of the equation, have moved up. So you’ve got lower supply and higher demand, and that means prices moving up. As I said earlier, some of this is related to the normal seasonal ebb and flow of the market. Usually supply moves up first, as people start to put their homes on the market, then we watch to see if demand keeps pace.
Now let’s move onto the median days on market. As you can see in January it was 51 and it moved down dramatically to 26 days on the market in March. This is also tied to the change in the seasonal market. A lot of houses that go under contract and settle in December and January have been on the market during the slowest time of year and were unable to sell. Due to this, they will show longer days on market when they do finally get an offer and go to settlement. As more “ fresh” inventory comes on the market in the spring, the properties that go under contract tend to show lower days on market.
This next chart shows the ratio of the sale price to original list price for properties that have settled in the first quarter. As you can see in January it was 98.3% and that has moved up to almost 100% so that means that most houses that went under contract this year and settled in March sold for full price. Part of this is tied to the last chart we saw. Properties that stay on the market longer, tend to attract more low offers.
Let’s take a quick look at the past 10 years, just to give you a little historical perspective. You can see at the bottom of the market in 2009 most homes were selling for 94.3% of the asking price. That has steadily moved up over the past 10 years and has basically been hovering between 96.8 and 100% since February 2015.
Now let’s move onto the months of supply. As you can see although it’s moved up slightly it’s still right around one and a half months of supply. A balanced market nationwide is generally considered to be about six months worth of inventory. In the DC metro area, I would say that number is probably closer to four, maybe 4 1/2 months worth of inventory. The DC metro area has a much more fluid and dynamic real estate market than many other parts of the country.
Again let’s take a quick look backward for historical perspective. At the bottom of the market in 2009, it was right around 6 months worth of inventory. It’s been trending down consistently since then and has been below 4 month’s worth of inventory since 2011.
And finally, the one that most people focus on is the trend in sales prices. As you would expect with inventory sliding down, prices have moved up in the first quarter.
But if we take a minute to look at things from a different perspective, the rate of appreciation has decreased over the past few months, although it’s still well within the historic range.
So the picture overall is that the market that is generally leaning towards sellers, although maybe trending towards a more balanced market. Obviously there are big differences between neighborhoods and price ranges. Having a skilled professional agent on your team will help you to understand the nuances of the market so that you can make the best decisions regarding your real estate needs.
Thank you for taking the time to read this post. If you’re interested in a more detailed analysis of what’s going on in your neighborhood, or in a neighborhood where you were thinking of buying, reach out and let me know. I’m happy to put together some neighborhood-specific data for you. If you know someone, maybe a friend or neighbor, who might benefit from this information, or who may have questions about real estate, please share this post with them.