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.
When 2012 comes to a close, we believe we’ll look back on it as a year of
tremendous opportunity for home buyers and sellers alike – but for some
it will be a missed opportunity.
We are witnessing something for the first time in our memory in Montgomery County real estate: the principal & interest payment for a median-priced home is now less than the median rental price.
At the market’s peak in June 2006, the mortgage payment for a median
priced home was 36% greater than the median rental price. Today, it’s
10% lower. We know there’s more to the cost of owning a home than the
mortgage payment, and we’re certainly not suggesting that everyone
should buy a home. But home prices are beginning to rise, and interest
rates will almost certainly be higher a year from now – and we think
that it will be a long time before we see the total cost of buying a
home this low again.
indicator we look at is the percentage of homes going under contract in
a given month that have been on the market 30 days or less. In times
other than a boom or bust in Montgomery County, roughly 50% of homes
going under contract are on the market for a month or less. In June
2004, during the boom, that climbed to 87% as buyers were snapping up
everything in sight. In June 2008, it dropped to 30% as buyers were very
nervous about market conditions. It’s now at 53%, a sure sign that
buyers are willing to buy when they see value. Buyers still remain
appropriately cautious – even in multiple offer situations they are
rarely waiving home inspections and appraisals, and that’s a good thing.
unique circumstances also mean there is great opportunity if you’re
thinking of selling – inventory is very low and buyers in some areas and
price ranges are having a tough time finding what they want. Take a
look at the absorption rates tables that follow to see the hottest price
ranges and property types. Attached and detached homes priced less than
$300,000 have absorption rates well in excess of 50%, and all condos
priced under $750,000 have absorptions rates higher than 30%. Generally,
lower Montgomery County is faring better than the outlying suburbs.
Still, your personal circumstances have to be right to consider making a
move, but if they are, this is a great time to sell.
ABSORPTION RATE BY PROPERTY TYPE
following tables track absorption rate by property type, comparing the
rates in the just-completed month to the rates in the same month of the
previous year. The absorption rate is a measure of the health of the
market, and tracks the percentage of homes that were on the market
during the given month and in the given price range that went under
contract. [The formula is # Contracts/(# Contracts + # Available).] An
example: The absorption rate for detached homes priced between $500,000
and $749,999 in June 2012 was 26.4%; that compares to a rate of 18.1% in
June 2011, and the increase means the market was better in 2011 for
that type of home. If the absorption rate was less in 2012 than in 2011, we have put the more recent absorption rate in red. This month there was improvement for 11 of 18 individual categories with activity, and one remained the same.
CONDOS & CO-OPS
The overall absorption rate for condos and co-ops for June 2012 was 35.2%, an increase from the 23.1% rate in June 2011.
The overall absorption rate for attached homes for June 2012 was 41.3%, up from the 32.2% rate in June 2011.
This improvement is due entirely to much lower inventory; contract activity dropped significantly in June.
June 2012’s absorption rate for detached homes was 25.5%, up from 21.5% rate of June 2011.
And as we have seen in the other property types, the absorption rates are higher for the lower-priced categories.