Every month, the Greater Capital Area Association of Realtors (GCAAR) releases Washington, DC and Montgomery County, MD home sales statistics. The DC condo and cooperative market has been hot, so let’s take a look at the numbers from June 2015.
Listings
There were 531 new listings this month, compared to 557 new listings a year ago, showing a 4.7% decrease. There were 664 total active listings in June, a decline of 3.3% compared to June 2014. The majority of the listings fell within the $200,000 - $699,999 price range, with condos & coops in the $400,000 - $799,999 range seeing the greatest increase in inventory year-over-year.
Contracts
In June 2015, 435 homes went under contract, which was an increase of 6.1% compared to June 2014. Similar to what we saw with the month’s listings, the bulk of the contracts were placed on homes in the $200,000 - $699,999 range. However, the market is heating up for condos in the $600,000 - $799,999 range, where we saw a greater than 150% increase in units going under contract year-over-year.
Courtesy of the Greater Capital Area Association of REALTORS®
Settlements
More homes were sold in June 2015 compared to June 2014, but not by a lot. To date, 1907 condos & coops have sold in 2015, whereas 1891 were sold during the same period in 2014.
Absorption Rate
Ever heard of the Absorption Rate? This is simply the rate at which available homes are sold in a specific real estate market during a given period of time. It is calculated by dividing the total number of available homes by the number of sales per month. In June 2015, there were 664 total active listings, while 435 condos & coops went under contract during the same time, making the Absorption Rate just 1.53. This means the DC condo & coop market strongly favors sellers, and buyer’s are finding themselves in bidding wars.
To make sense of this, let’s say no additional homes came on the market in the foreseeable future. After just 1.5 months, all of these condos/coops would be sold! Historically, a balanced market would have an Absorption Rate of 4, with anything higher indicating a stronger buyer’s market and anything lower indicating a stronger seller’s market. At 1.5, it is a very, very strong seller’s market, and buyers have less leverage at the negotiation table.
What does this mean to me?
Buyers
If all of this talk about a seller’s market makes you cringe, just remember, you’re not alone. However, home prices continue to rise year-after-year, so hesitating to buy now could cost you in the long-run. In addition, interest rates have been historically low for historically long, and the Fed has already indicated an increase is in sight. A good agent can map out a sound strategy as you enter the process, which will save you time, money and stress. Your agent should have the resources you will need to make your offer appealing, while also ensuring you don’t buy that dream home with the cracked foundation!
Sellers
As you may have heard, it’s a strong seller’s market, and condo/coop sale prices continue to increase year-over-year. However, all good things must come to an end, but when exactly does that happen??? There are three things that contribute to how quickly your home sells: 1) Price; 2) Access; and 3) Marketing. As a homeowner, you determine the Price to list your home, as well as how Accessible it will be to prospective buyers. Your agent should handle the bulk of the Marketing. When considering a listing agent, be sure you work with one who understands these concepts and can assist you in making informed decisions throughout the process.