By Peter Clute and Fred Kendrick
The DC Big Picture
The month of May brought the best sales performance in almost two years, with combined contracts on single-family homes, condominiums and cooperatives up 7% from last year. While the market seems to have pulled out of the slump felt through 2006, the overall numbers still do not approach the Mays of 2004 and 2005, trailing those months by 17% and 21% respectively. The strong May numbers are due almost completely to near-record sales in the condominium/cooperative market, while the single-family side continues to lag behind sales of the last several years. However, when you look at effective inventory (active listings divided by monthly contracts), it becomes apparent that the sales rates are very similar for both homes and units. At the end of May there was 3.4 months of inventory for all properties, with the single-family figure slightly higher and the condo/co-op figure slightly lower. These numbers suggest a much stronger, healthier market than is often depicted in local newspapers. There have been small average price gains for homes and units compared to last year, but nothing approaching the double-digitincreases seen from 2000 to 2005.
Sales posted a modest rebound in May with the highest number of new contracts in the last year. Gains were spread across several price ranges but most occurred for homes priced from $600,000 to $700,000 and from $800,000 to $1 million. Sales in May were just about even with those in May of 2006. In the larger perspective, however, single-family sales continue to fall far short of the last few years. They trail the first five months of 2006 by 11% and are 33% short of the most recent high reached in May of 2004. This sales decline is pretty much across the whole range of single-family properties. The inventory of homes for sale is marginally higher than at any time this year and 1% ahead of the surge in listings seen a year ago. But this increase is entirely accounted for by homes priced below $500,000. For the 58% of the single family market priced above this level, the inventory has actually declined by 17% from May of 2006. There is currently a relatively low 3.5 months of homes for sale compared to 4 months at the beginning of the year and a national inventory of well over 6 months. So the local single-family sales market remains very much in balance between buyers and sellers. Five months into 2007, average sales prices are 5% higher, and median prices are 3% higher, compared to year-end 2006. These are rather modest gains in comparison to the last several years and reflect the slowing market which we have been experiencing the last two years.
Condominiums and Cooperatives
New contracts on condominiums and cooperatives jumped 10% from April to post the second highest monthly total of the year. It was the second best May on record, 15% ahead of the same point last year, but 15% behind May of 2005 (the highest monthly total of any month to date). Sales of units between $200,000 and $500,000, which made up 58% of the active inventory and 67% of the new contracts in May, were up 28% from last year.
For the year-to-date, condo/co-op sales in 2007 trail only the year 2005 (the best year on record, by 2.5%), but leads all other five-month totals from 1990 by margins ranging from 16% in 2006 to 316% in 1996. Compared to last year, sales gains were registered in 12 of 13 price ranges.
The inventory of available units rose 4% from April to the highest point this year, but is still 13% below last year. Like the single-family inventory, the only significant increases have come in the lower end of the market, with the number of units under $200,000 (15% of the market) up 75% from last year. The inventory of units over $1 million is also up (by 27%), but this only makes up 4% of the market.
The effective inventory of condominiums/cooperatives at the end of May stands at 3.2 months, compared to 4.3 months a year ago and 0.8 months in 2005. The current market certainly can’t compare to the heated pace of 2005 and the preceding years, but 3.2 months of inventory is very healthy and closer statistically to a seller’s market than a buyer’s market.
The average price of a condo/co-op is up 1% from a year ago and the median price is down 1%. More realistic pricing has kept the condo market from slipping into the long predicted “bubble” and kept 2007 on a near-record sales pace for properties entered in the Metropolitan Regional Information System (MRIS).