Good afternoon. I am Shelly Murray, 2010 President of the Greater Capital Area Association of REALTORS ® . GCAAR represents REALTORS in the District of Columbia and Montgomery County. We experienced a year of increased confidence in our market. Sellers are more realistic about pricing their homes and increasingly, buyers are understanding the realistic value of housing, and that price declines are not as dramatic as they may have thought. I will now present some statistics to understand more about today’s market
The Montgomery County 2009 median prices are down compared with 2008. The good news is that prices have leveled in the 4 th quarter. Prices had been decreasing in response to the economic crisis, higher inventory levels, and short sales and foreclosures on the market. As conditions have begun to improve, prices are trending toward a more stable level.
Median prices in the District of Columbia show a slight decline compared with 2008. They are now experiencing traditional seasonal trends. Prices in the District did not begin to respond to the downward pressure brought on by economic conditions and the recession until later than in surrounding areas. There is more limited inventory, and a more constant demand for housing in a prime location.
Montgomery county single family home settlements have increased since March. Settlement activity is usually highest in the months from May through August, and typically drops off in the fall. This year, activity in October and November bumped up, possibly in response to the impending deadline for the Federal homebuyer tax credit, which was originally scheduled to expire on November 30, 2009.
Montgomery County condominium settlements have increased throughout the year, including an 86% increase in October. What has caused the huge increase? AFFORDABILITY. Prices for condos and coops in the county have decreased from a median price of $260,000 in 2008, down to $215,000 in 2009, and from an average price of $310,000 in ‘08 to $250,000 in 2009 which increased affordability for homebuyers.
2009 District of Columbia single family settlements have generally shown increases over 2008. October settlements were 40% above last year’s rate Settlement activity typically increases during the second and third quarter of the year. Buyers seem to be responding to more favorable pricing and financing rates, and the availability of the homebuyer tax credit.
District of Columbia condominium settlements have also experienced an upswing since May.
Montgomery County single family inventory has been steadily dropping since April. Inventory is down more than 50% over 2008 levels in October. As we saw earlier, settlement activity was strong in July, August and September as one might expect. Increased settlement activity in October and November helped further reduce inventories.
Montgomery County inventory of condominium/co-ops has declined throughout the year. As I mentioned earlier, prices for Montgomery County condominium and coops have decreased over 2008 which increased affordability for homebuyers.
District of Columbia Single family inventory has been down since April Inventory is declining as the prices and financing rates have increased affordability for homebuyers. We’re meeting a point of equilibrium between the sellers listing their homes, and the buyers ready to write contracts. New supply is meeting new demand here.
District of Columbia condominium/Co-op inventory levels began shrinking in March This reflects increased sales and settlement activity during the normal selling cycle which occurs in the second and third quarter of the year. It is interesting to note that settlement activity in 2009 was up over 2008, even though prices in the D.C. Condo/Coop market remained fairly stable.
In Montgomery County, there has been a steady decline in Days on Market since August So what is causing homes to go under contract faster? Buyers looking to take advantage of increased affordability factors, and the tax credit available to first time homebuyers, have spurred a decline in the days on market. This is an indication of continuing market recovery. We have even heard of instances of properties with multiple contract offers in certain neighborhoods.
In the District of Columbia, the average Days on Market is up, but over the past 3 years, the District’s market has been more stable than the surrounding region. Unlike in Montgomery County, prices have been more stable in DC. As prices have held, affordability has not increased, and therefore days on market have increased slightly.
Absorption rate is a great indicator of the overall health of a market as it illustrates both supply (listings) and demand (contracts) Montgomery County paints an even more dramatic picture of the market. Here the absorption rates reached 25% mid-year and have maintained their levels for 5 months Why have we seen such a huge increase in 2009? Again, affordability factors and the tax credit have created favorable conditions for buyers. Higher contract activity and the absorption of the available inventory have resulted. This may be an indication that prices are coming into alignment with buyers expectations.
Absorption rates are calculated by dividing active listings by contracts each month. As we take a look at the District of Columbia absorption rate, it appears that the market has continued to experience healthy growth in 2009
Here the District of Columbia is represented in green, and Montgomery County in pink. The 10 year perspective illustrates the price decline over the past 2 years but still shows solid gains over the decade. Prices have dipped, but are still nearly double where they were a decade ago. Real estate in our region remains a good long term investment.
Looking at the past decade, you can see the general sales trends Over the past 2 years we have seen a leveling off, illustrating stability in the market This could indicate that we may be entering a ‘normalized’ sales market, where buyer and seller expectations are more closely aligned.
Putting it in historic perspective, you can see just how much of the excess Montgomery County single family inventory that had built up since 2006 has been absorbed. Inventory is down in all markets Excess Montgomery County single family inventory from 2006 – 2008 is an example of the outer suburbs being hit harder by the financial crisis than areas inside the beltway. Closer in, markets remained more stable in this timeframe. The good news is that as of November 2009, the county’s single family inventory is back in line with historic norms.
Today’s Days on Market average falls just about equally between the highs of the late 1990s and the lows of the early 2000s Days on Market has also leveled, holding fairly consistent from 2008 to 2009. This consistency over the past 18 months is yet another sign of stability in the market.
In summary, what does all of this mean for the future? Factors to consider include: Interest rates are historically low. Compared to the rest of the US, we still have a relatively strong local job market. The District of Columbia and Montgomery County have a healthy inventory of homes The tax credit has been extended and expanded to include current homeowners.
So what’s holding us back? Money is tight – even some qualified buyers are having trouble securing mortgages Appraisals are still a challenge and continue to cause contracts to fall through
So what’s in store for 2010? We expect steady or slight increases in sales and prices with steady inventory The overall economy appears to be stabilizing (take cue from GMU presentation on this point!) Interestingly, NAR’s most recent survey of REALTORS® about their recent clients showed that home buyers are buying with greater confidence. Currently, 70 percent believe home values will rise next year. Earlier in the year, 60 percent of buyers believed home values would actually fall over the next 12 months. We are seeing signs of greater consumer confidence in real estate.
My contact information is included in the packet you picked up at the desk, as is a copy of this presentation. Visit our web site: GCAAR.com for up-to-date information and statistics. Thank you -
Annual Press Conference - GCAAR Presentation
2009 YEAR IN
Serving Washington, DC and
Montgomery County, MD