Prepared by Peter Clute and Fred Kendrick Coldwell Banker Residential Brokerage
Despite speculation of a housing bubble reported in various local and national media outlets, the Washington, DC market continued to be strong in May, reaching the highest combined monthly sales total since 1990 (when GCAAR/WDCAR began collecting statistics). Led by a record month on the condominium/cooperative side, new contracts on single-family homes, condos, and co-ops were up 11 percent from April and up 6 percent from May of 2004 (the previous record month).
May condo/coop sales rose 17 percent from April, easily surpassing the previous high mark set in March by 11 percent. This growth in the condo market has been spurred by the infusion of new inventory (including both new projects and re-sales of units less than five years old). In the month of May, the number of new listings above $500,000 was up 100 percent from the same point last May. As a result, the number of new contracts in this price range jumped 191 percent from last May. For the year-to-date, the $500,000 and over range is ahead of last year by 142 percent.
Sales of single-family homes in May were off 8 percent from 2004 and year-to-date sales are 7 percent behind last year’s record pace. These losses occurred mostly in the lower price ranges, however. Sales of homes below $300,000 were down 58 percent from last May (with inventory down 40 percent) and year-to date sales were down 51 percent. Over $300,000, the inventory grew 13 percent from last year and May sales registered a 20 percent gain from last year. Year-to-date sales are 23 percent ahead of 2004. On the surface, the DC single-family market seems to be lagged behind the explosive growth in the condo market, but a closer look at inventory and price numbers shows these markets to be very similar. The best indicator of the strength of the DC housing market might be effective inventory (the current inventory divided by the number of new contracts in the month). The effective inventory of condominiums and cooperatives at the end of May stood at 0.91 months, while the single-family number was a slightly higher 1.28 months.
The most active price categories are condo and coops between $200,000 and $300,000 (with an effective inventory of 0.42 months) and single-family houses between $300,000 and $450,000 (at 0.86 months). When market equilibrium is considered to be 6 months of inventory (and the current national average is reportedly 4 months), these are extremely low numbers. While the record monthly condo/co-op sales totals may focus attention on that market, average price gains compared to 2005 are actually higher on the single-family side (17 percent vs.15 percent). If these gains hold true through the end of the year, this would be the sixth consecutive year of double-digit appreciation in the DC housing market.
Fred Kendrick has been a real estate agent for 25 years. He have served on a number of committees for GCAAR, WDCAR, MRIS and NAR. For the last five years he has co-authored the Washington, DC Housing Report with Peter Clute using GCAAR data. Kendrick has earned the ABR, e-PRO and GRI designations.