DC House Market Still Strong, But Plateauing

The real estate market for houses in Washington DC remains strong, but there are possible indications of a coming plateau in the market.

Inventory of available houses in Washington is down 27.3% in April 2012 vs. 2011 (1,199 vs. 872). This is, obviously, an indication that the marketplace is recovering from the downturn. It’s important to note that at this point, inventory is down 46.5% from the highest level of inventory in 2008 when there were 1,835 houses on the market.

One small indicator that the market is slowing slightly is that the total number of new listings on the market for April is “only” down 16.5% versus last year (505 vs. 605). While that’s still very good news, it’s 10.8% higher than the drop for the rest of 2012. This indicates that the dearth of inventory is lessening.

Another gray cloud is the number of contracts taken. For the year so far, contracts for houses in Washington, DC are down 2.5% compared to last year (1,407 vs. 1,443). While that is a very small increase and is also related to a lack of inventory to buy it’s an indication that buyers are not willing to just buy anything at any price.

Slightly more troubling than a drop of 2.5% of contracts year over year is that the number of contracts taken in the month of April is down 3.7% compared to last year (445 vs. 462). This indicates that the slowdown is accelerating.

Clearly, the overall news is about sales of houses in Washington, DC is very good and we are still in a slight seller’s market. But, the combination of the drop of inventory slowing and the number of contracts slowing indicates that the market for houses in Washington, DC is not accelerating, but may well plateau in the near future.

What this means for a seller is that it’s important not to overestimate your position in negotiations. It’s still crucial to price your home aggressively (meaning on the lower end of a range of possible prices) and be prepared for a market that is slowing, not accelerating. From a buyer’s point of view this market data is an indication that the market is still slightly in the seller’s favor, but it’s not surging towards a full-blown seller’s market. Buyers need to bring strong offers for homes that are well priced and expect to compete when a home is intentionally priced below market.

Here is a link to the statistics from the Greater Capital Area Association of Realtors: http://www.bestaddress.com/upload/documents/dcsf041212052313195438866.pdf  These were the statistics that were used for the information in this blog posting.