DC Housing Report: November 2009

• December 29, 2009

by Fred Kendrick

Photo by Marie McCarthy from City-Data.com

Fred Kendrick of TTR Sotheby’s International Realty, with help from Peter Clute of Coldwell Banker Residential Brokerage, puts together a monthly report on the state of the housing market in the District. Following is the most recent installment for November.

While the sales pace slowed in November, as it typically does with Thanksgiving and the coming holiday season, new residential contracts were once again up sharply over those of the last two years. More impressive than these overall gains, these sales increases were shared by most price ranges — of single family homes, condominiums and cooperatives — indicating the breadth of the market’s resurgence in the city of Washington.

New contracts for homes and units in November were up 40% from a year ago and 8% from the stronger market in 2007. For the year, contracts were up 22% continuing the turnaround in the market that has taken place since March.

The inventory of single-family homes, condos and co-ops is at its lowest point of the last two years leaving an overall 4.5-month-supply for sale. This is somewhat lower on the single-family side but in either case it is less than half of what is typical throughout this region and the country. It has left a market largely in balance between sellers and buyers, although this can vary by neighborhood and price range.

The average sales price for all closed properties through November fell just slightly (by less than 1%). Condo and co-op sales prices are about even with those in 2008 while single-family prices are down by 17% — which needs to be a continuing word of caution for sellers in pricing their homes for sale. We continue to see price levels holding relatively steady for several more months with modest gains possible later in 2010.

Single Family

New contracts this month jumped 42% from November of 2008. They were also ahead of the same month in 2007 by 9% and, as a measure of how far this recovery has progressed, were nearly even with the relatively strong market in November of 2006.

Some of the biggest gains this month were made by homes priced over $1 million, which were up for the second month in a row after trailing the rest of the market for most of the year. Back in the spring the sales recovery was being led by lower-priced homes; then in the summer it expanded to the middle range; now it is being joined by the upper brackets – all encouraging signs of what appears to be a broad-based recovery.

Eleven months into the year, sales are now ahead of 2008 by 29% – up from the 21% mark just a month ago. The largest and most sustained gains have been registered by lower and middle priced homes (up to $800,000) but, as just noted, there are signs that the more expensive homes may now be joining in.

The inventory of homes available for sale is at the lowest point of the year, down 19% from January, with the largest numbers being under $500,000 and over $1.5 million. At the current sales rate there is a 4.2 months supply of houses to sell, which is less than half of the 8.75 months back in January.

Average and median sales prices this year are down 17 to 18% from the 2008 level, in part a consequence of a majority of the closings so far being for lower and middle priced homes. Since spring, however, this discrepancy has been narrowing. This month the average is off only 1% and the median just 1.5% from their September (3rd Quarter) levels. The bottom appears to be near but history shows that price recovery will take months, if not a year, and this time it is likely to be modest considering the overall state of the economy.

Condominiums and Cooperatives

New contracts on condominiums and cooperatives were up 38% from last November with most of the increased activity in the upper price ranges. Sales of units priced above $600,000 were up 236% from the same period last year. Actual settlements were up by 121%. November contracts did fall 38% from October, and while this is a larger seasonal drop than expected, the outlook for the condo/co-op market in the District remains positive.

Year-to-date contracts are 18% ahead of last year’s pace and trail only 2002 to 2007 in the years since GCAAR and WDCAR started compiling these statistics in 1990. The largest gains over 2008 are in both the low end and the high end, with units priced under $150,000 up 94% and units priced between $900,000 and $1,250,000 up 76%.

The inventory of available units fell slightly from October and is at its lowest point since January of 2006, 21% below the same point last year. The 38% drop in contracts from October did cause the effective inventory to rise to 5.13 months, but this is still substantially lower than the 9.03 months of inventory in November of last year.

Both the average and median prices of condominiums and cooperatives are down 1% from 2008 prices after showing small gains earlier this year. This is one case when the actual statistics have not reflected what has occurred in the market. In reality, condo and co-op owners are seeing similar losses to those seen on the single-family side, but a 19% increase in settlements over $800,000 has pushed both average and median prices higher and masked losses in value throughout the condo market.