May/June 2007

Prepared by Peter Clute and Fred Kendrick Coldwell Banker Residential Brokerage

The DC Big Picture

One quarter of the way through the year, the residential sales market is showing much different results for single-family homes on one side and for condominium/cooperative units on the other. For condos and co-ops, this month saw the second highest number of new contracts for any March since this report began in 1990. March also produced the third highest level of contracts for any month during this period. Year-to-date sales are the highest recorded for any first quarter. For single-family homes, March saw the highest number of new contracts so far this year and the highest number since June of last year. However, these gains were not sufficient to keep pace with prior years -- the result being the lowest level of sales, both for the month of March and for the first quarter, since 1997. The net result for the residential market as a whole is that March trails last year by 2% and the two prior years by 14% to 16%. For the year-to-date the first quarter is 1% ahead of 2006 and 10% to 12% behind 2004 and 2005. March usually sees a sizeable gain in inventory but the increase since the beginning of the year has been a modest 2%. The overall inventory is now 25% lower than at its peak in the fall of 2006 and 15% below March of a year ago. There is currently a 2.93 month supply of homes and units for sale which is well below the 8 month national average. This presents a picture of a relatively balanced market between buyers and sellers entering the second quarter, which is often the most active quarter of the year. The end of the first quarter shows the average selling price of single family homes to be slightly higher than in 2006 while condominium and cooperative sales prices are slightly lower. The average time on the market for settled properties is just over a month longer than in March of last year.

Single Family

In March, the 372 new contracts for single-family homes were 26% higher than in February and 34% higher than at the beginning of the year. However, these sales fell 12% off the level reached in March of 2006 and 23% below March 2005. Not since 1997 have there been fewer than 400 sales in the month of March.

Homes priced from $400,000 to $500,000, $600,000 to $900,000 and from $1,000,000 to $1,250,000 (a combined 46% of the current market) showed gains in the number of March sales.

However, for the entire first quarter, sales were off 11% from last year and 32% from the high point of the single-family market in 2004. Only the 8% of homes in the $800,000 to $900,000 price range were able to show an increase in sales in the first quarter compared to a year ago at this time.

There is currently a 3.09 month’s supply of homes for sale, although this increases to 5.3 months for homes over $1.5 million. The inventory has grown 3% since the beginning of January but is 4% lower than this time in 2006 and 25% lower than the high point reached in October of last year.

Despite the decline in the number of sales, the average sales price of homes at the end of the first quarter is 5% higher than at the end of 2006. The median price, which is the mid point of all sales, is down by 1%. Taken together, this indicates that selling prices so far in 2007 are about even with last year.

Condominiums and Cooperatives

New contracts on condominiums and cooperatives in March reached their highest level in almost two years and posted the third best month on record. March sales were up 21% from February and up 8% over March of last year. Condos and co-ops between $200,000 and $300,000 registered a 20% gain from last year and units priced from $500,000 to $800,000 a gain of 23%. The only substantial price category to show a loss was the $300,000 to $400,000 range, down 10% from last March but up 10% from February.

Through the first three months of 2007, sales of condominiums and cooperatives are off to the best start in the eighteen-year history of this report. First quarter sales were up 8% over the same point last year and up 3% over the record year of 2005. The largest gains in the quarter were seen in the $600,000 to $800,000 range (up 58% from 2006) and the $150,000 to $200,000 range (up 42%).

The inventory of available units has held steady since the first of the year, aided by a healthy sales pace and 17% fewer new listings in the quarter than last year. At the end of March there was 2.79 months of condo/co-op inventory, the lowest number since August of 2005, but still quite a bit higher than the 0.78 months posted in March of 2005.

The average price of condominium and cooperative units settled through the end of March is down 4% from the 2006 average and 8% behind the high set in 2005. The median price is down 3% from 2006. The rising sales numbers and falling prices are the opposite of what we are seeing in the single-family market and so far this year this seems to be the healthier formula.