Home prices in the Washington area rose 6 percent to $317,900 in February, according to a report issued Monday showing encouraging signs that the local housing market is improving.
It’s unclear whether the unseasonably warm weather has anything to do with it but the report showed price increases in all segments of the market. The median sale prices of townhomes, condominiums and co-ops, and single-family homes rose 9.5 percent, 6.8 percent, and 2.8 percent, respectively, in February compared to the same month in 2011.
More encouraging, the number of foreclosure sales plunged nearly 42 percent in February, compared to a year ago. And the percentage of homes for sale that are foreclosures has dropped to 3 percent of the market — the lowest since March 2008. (That compares to last year, when one in 10 homes for sale in the area was a foreclosure.)
“The trends are looking up,” said Corey Hart, of RealEstate Business Intelligence, a division of the region’s multiple listings service, which issues the monthly report. “If supply stays low, there’s nothing in most recent numbers pointing to anything but positives.”
As the housing market has struggled, few sellers have put their home up for sale unless they really needed to. And as a result, the inventory of homes for sale remains at a low not seen since August 2005.
But Hart said that could also mean continued pressure on prices to move them higher. There currently is 2.9 months of supply of homes for sale, which is technically a seller’s market, so long as there are enough buyers interested. While sales activity increased in February with a 1.9 percent rise in contracts compared to a year ago, many potential homeowners have been unable to buy because of stricter lending standards and concern about resale value.
“Should this trend continue where there’s a shortage of inventory, that should have a positive impact on pricing,” Hart said.
Of course, some economists worry about the so-called “shadow inventory” of foreclosed homes that have not yet hit the market, as the states attorneys general worked out a settlement with the five largest banks over foreclosure fraud and robo-signing. But local real estate experts say they don’t expect a new, sizable glut of foreclosures to hit the market suddenly in the Washington area.
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