May 2012 - Market Update

Home prices in DC Metro area rose to $392,500 in May an 11% increase from May 2011. This price gain reflects the fourth consecutive year-over-year gain, and the second consecutive double-digit increase for home prices in the region. The increase can partly be attributed to the low Inventory in the Washington region which in May was at its lowest May-level since 2005.  These trends, coupled with decreasing Days on Market (average down 17.6% from May 2011), and an increasing sale-to-list price ratio (up 1.9% from May 2011 to 96.3%) signal that it is a Seller’s market heading into the summer months.
   
Here are some other trends seen from May 2012:
    PRICES
    Home prices continue to gain momentum throughout the region. The median sale price in the DC Metro Area is $392,500, up 11% from May 2011.  This is the fourth consecutive year-over-year increase and the second straight month of double-digit price growth metro-wide.  Pricing in all jurisdictions within the metro area increased relative to May 2011.  Year-to-date medians are also on the rise, up 7.7% to $350,000 for the metro area.

 NEW CONTRACTS
    Newly signed contracts rose slightly with condos posting the strongest growth. New contract activity in the Washington market continues on an upward trajectory, as the region posted its 13th consecutive year-over-year increase in new contracts.   In total, 5,593 contracts were signed in May, a 1.6 percent rise from the previous year.  The condo segment of the market grew the most with 1,362 new contracts in May, 100 more than May 2011, a 7.9 percent gain.  Roughly half of the new contracts are detached homes, a quarter are attached townhomes, and a quarter are condos.

INVENTORY
    Declines in the area’s active listings persist, the lowest May level since 2005.  There were 10,510 active listings in the DC Metro Area at the end of May, a 32.4% decline from May 2011.  This is the 15th consecutive year-over-year inventory decline.  The shrinking supply indicates a stabilizing market, as sales have increased and listings have declined.  As interest rates remain low and demand rises, the low supply will continue to put upward pressure on prices.  This price growth could entice hesitant sellers to enter the market.  The low supply also indicates that many potential sellers may still be wary of their financial situations, and are more comfortable remaining in their current homes.  A similar trend can be observed with new listings.  In May, 6,084 new listings entered the market, which is 6.7% below the previous year and the 11th year-over-year decline in new listings in the past twelve months.

CLOSED SALES
    Sales volumes in the Washington, DC Metro Area continue to improve relative to 2011 levels. The 4,478 closed sales in May represent a 14.3% gain from this time last year and the second straight month of volume gains compared to a year ago.  Most of the growth is being driven by sales of detached homes, which at 2,342 units is 20.9% higher than May 2011.  Townhome sales edged up a mere 0.5% from May 2011.  Condos also fared well in May with 1,062 units sold, a 16.6% increase from last year.
    The number of foreclosure sales is down 47.3% compared to last May, the 25th straight year-over-year decline for this category.  The 307 foreclosure sales in May represent only 6.9% of all sales in the region, the lowest proportion since MRIS began tracking distressed listings in April 2009.  Short sales on the other hand are up 21.2%, the 7th year-over-year increase in the past eight months.  Much of this shift from foreclosure to short sale reflects a change in how banks deal with their distressed assets.