April 2012 - Market Update

Pricing in the DC Metro Area continued recent positive trends with a year-over-year median sale price gain of 11.2 percent, the highest annual gain in over six years. Active inventory remains low compared to demand, with only 3.2 months of supply. This not only put upward pressure on pricing, but resulted in significant declines in days on market prior to sale and the percent of sold price vs original list price at settlement. These are just a few of of the key trends that we are seeing from April sales. Here are the other key trends that we are seeing:
 
Pricing
All the talk of a looming shadow inventory of distressed properties apparently did not offset the effect of a limited supply of available inventory and historically low interest rates, as the median sale price for the DC Metro Area rose 11.2 percent over the April 2011 level to $371,500. This represented the largest year-over-year gain in median sale price since January 2006 and marked the third consecutive month of annual gains in this indicator.  The year-to-date median sale price is $337,000, 6.7 percent higher than the $316,000 YTD level through April 2011. Every jurisdiction in the region has seen an increase in YTD median sale price, led by Falls Church (+23.3 percent), Arlington (+12.4 percent) and Fairfax City (+11.7 percent). 

Closed Sales
Along with continued low inventory compared to demand, the composition of the sold inventory was a factor in the pricing increases in April 2011. Year-over-year gains in detached property sales outpaced annual gains in attached property (townhome + condo/co-op) sales.  The 1,910 detached property sales were up 10 percent over April 2011 while the 1,858 attached property sales represented a modest 3.9 percent year-over-year increase. The number of closed sales in April represents a 7 percent increase over the April 2011 level and 12.7 percent increase over March (outpacing the ten-year average March to April increase of 8.4 percent). The year-to-date total of 12,323 closed sales is down slightly – 1 percent – compared to the 12,448 sales through April 2011.
 
New Contracts
The 5,663 new contract agreements signed in April represent a 9.5 percent increase over April 2011 and were 11.0 percent higher than the five-year April average. This level of contract activity was essentially flat with the number of new contracts in March (5,671), going against the normal pattern for this time of year: The ten-year average March to April change is +7.4 percent.
 
New Listings
The 6,280 new listings in April represented a 14 percent decline vs. those entered in April 2011, marking the 11th year-over-year decline in new listings in the last 12 months. Notably, the level of new listing activity in April represents a 9.1 percent decrease compared to the 6,909 new listings in March. This is only the 2nd time in ten years that there were fewer new listings in April than March, the ten-year average trend is a 7.6 percent increase in new listings. The last time there was a March-to-April decline in new listing activity was 2006, when new listings dropped 2.9 percent month-over-month.

Active Inventory
So how does the supply level look heading into May? The 10,652 active listings at the end of April were 31.5 percent lower than the same point last year. Supply is tight relative to demand across the board, but especially so in the more moderately priced attached home segments. Months of inventory, or the number of months it would take for the current inventory to be sold given the last twelve months’ average sales rate, is 3.2 months. The amount of active townhomes relative to demand is the lowest, with only 2.2 months of supply; the detached market has 3.8 months of supply.

Impact on Seller Success
Low inventory relative to demand is advantageous to practical home sellers, and declines in Days on Market and seller concessions to buyers are a predictable result.  The Average Days on Market (DOM) of 70 days was eight days lower than April 2011. The amount of original list price received at sale (SP to OLP ratio) was 95.6 percent in April, the second highest level since August 2007, further evidence that the DC Metro Area is a seller’s market.