The housing market in Washington, DC has been among the steadiest in the country ever since the national housing slump. Stability in this market owes much to the significant role that the Federal government plays in driving employment patterns there. Judging from detailed local housing data provided by the Metropolitan Regional Information Systems, the multiple listing service (MLS) which covers the Washington, DC metro area, and Real Estate Business Intelligence, a Maryland based group that specializes in data reports for MLSs and real estate boards, Washington is on track for another healthy spring market.
Closed sales in the Washington metro area rose 1.9% from February of 2011 to February of 2012, trailing the 13.0% increase in non-seasonally adjusted sales for the nation over this same period. However, it is important to remember that sales in Washington have been relatively robust for several years, so this mild improvement is from a rather strong plateau.
Over the last five years, closed sales in the Washington area have outpaced new inventories, which resulted in a steady decline in the months supply of inventory from its peak in 2008 (depicted in grey above). This pattern continued in February. New listings of properties were up 14.7% from January to February, a typical spring pattern. However, they were up only 2.3% compared to a year earlier. Steady sales and sluggish listing resulted in a decline in the total number of active listing to 9,823 in February, down from 10,095 a month earlier and 27% below the inventory level of 13,511 from last February.
Sales are likely to pick up this spring, though. Pending sales rose 11.3% in February compared to the same period in 2012. The increase in pending sales and decline in new listing suggests further tightening in the Washington metro market. This tightening should support modest price growth, which already appears to have taken hold as the median home price in February rose 6.0% from a year earlier to $317,900.
Further evidence of a strengthening housing market in Washington is the decline in days on market, which ticked one point lower from 86 days in January to 85 days in February and well below the 5-year average of 94 days. These trends point to a shift in pricing power in the local market away from buyers and toward a more balanced middle ground between buyers and sellers. The increase in the ratio of the average sold price to the original list price echoes this sentiment. That ratio, which reflects in part how much price/profit a seller concedes between the list and sale of a property, rose from 93.1% a year ago to 93.9% in February.
The recovery in the Washington metro area has not been distributed evenly. However, the headline figures are on the rise and low inventories combined with rising prices will force buyers to search out opportunities in other sub-markets. This pattern will help to spread the green shoots of recovery across the metro area this spring and summer.