MarketWatch, authored by David Howell, is published on a bi-monthly basis by McEnearney Associates, Inc. It provides useful and insightful summaries of current housing market trends. MarketWatch statistics include housing sales from all companies serving our Virginia - Washington DC - Maryland Metropolitan area.
The dictionary says that “convergence” is the act of coming together from different directions – and that is exactly what is happening with three key indicators in the Northern Virginia real estate market.
In the first quarter of 2013, we’ve seen the number of new contracts, new listings, and fully available inventory converge. A specific example: in March, there were 2,270 new contracts, 2,730 new listings, and just 2,341 listings on the market at the end of the month. Two short years ago in March 2011, there were twice as many available listings and 50% more new listings than new contracts.
It’s a tight market in most prices ranges right now, and we haven’t seen these indicators so closely aligned since the peak of the market in 2004. It’s so tight that there has actually been an 8% drop in contract activity year-to-date for homes priced less than $500,000. There simply isn’t enough inventory – just a three-week supply – to support the level of demand. But the upper brackets, while still a small slice of the market, are doing well. There’s been a 22% jump in contract activity through the first three months of the year for homes priced more than $750,000.
To give you an idea about how dramatically the market has changed, the second chart at right shows the same three indicators from January 2007 through the end of 2008. The number of active listings was as much as nine times the number of new contracts, and the number of new listings coming on the market was typically double the number of new contracts.
Low inventory continues to drive the market, with 35% fewer homes on the market right now than this time last year. We see more of the same in the months ahead. Thus far, there’s no discernible negative impact from sequestration, and there’s no reason to think that the low inventory situation is going to change anytime soon. Homebuyers below $500,000 are going to find it particularly challenging to find what they’re looking for.