After the typical summer slowdown, the real estate market in the Washington area is ratcheting up for fall — the second-busiest time of year here.
So far in 2017, the D.C. market has remained stable, especially among higher-priced homes. However, the true takeaway this year may be the strong increases within suburban communities just outside of Washington.
Here are a few indicators, based on data from RealEstate Business Intelligence, to keep in mind as we enter the final quarter of 2017:
Overall, median prices are up 4 percent across all types of homes (single-family, condominium and cooperative) in the Mid-Atlantic region. Most of this price appreciation is attributable to rising prices in the Maryland and Virginia suburbs.
Prices in the region are emerging in the suburban markets after years of stunted growth. So far in 2017, Prince George’s County is a true winner in price appreciation. Median sales prices in Prince George’s are up 10 percent this year to $275,000 with average sales prices up 9.6 percent at $283,500. This growth may certainly be related to affordability within the region as Prince George’s has typically experienced slower growth the past several years.
Other Washington-area counties are also experiencing gains in median sales prices: Loudoun County, up 4.5 percent year-to-date to $462,000; Fairfax County and Fairfax City, up 3.7 percent to $500,000; and Montgomery County, up 3.7 percent to $425,000.
Just outside of the District in Northern Virginia, median sales prices rose slightly in Arlington County, up 1.8 percent to $575,000. But they were flat in Alexandria City, remaining at $500,000.
Interestingly, average sales prices in the District are up 4.8 percent (to $687,000) while median prices are up only 0.9 percent (to $550,000). This variation may show that high-priced homes are appreciating faster than lower-priced homes, suggesting that middle-class buyers may see lower appreciation in their property in 2018.
Days on market, inventory
Besides sales prices, the number of days a home is on the market before going under contract is generally down in 2017 entering the last quarter. Median days on the market have decreased in the District (down 8.3 percent to 11 days), Montgomery County (down 30 percent to 16 days), Prince George’s County (down 13 percent to 20 days), Arlington (down 28 percent to 13 days), Alexandria City (down 30 percent to 14 days), Fairfax County (down 35 percent to 13 days), and Loudoun (down 45 percent to 11 days). This is another trend of buyer confidence in the market.
Moreover, the number of new listings year-to-date is up 1.6 percent. However, in supply strapped markets such as the District, the number of new listings is up 8.7 percent year-to-date from the same period last year. This may again show that the competitiveness in the District may be significantly lower given a greater number of homes on the market.
Yes, experts have said for a long time that inventory is low. Inventory is definitely picking up given we have more listings coming on the market. More listings means more supply, and it really affects the District the most.
With the start of the fall market and historically low interest rates, buyer confidence is increasing. This year, there was a 5.2 percent rise in the number of sold homes throughout the Mid-Atlantic in 2017 year-to-date. As of mid-September, 30-year fixed mortgages hovered around 3.78 percent.
While rates are expected to stay strong through the rest of 2017, there are expectations that interest rates could rise in the first half of 2018. While no one knows exactly how rates will move, historic low interest rates can only result eventually in slight increases. Throughout the past 24 months, interest rates have rarely gone above 4.25 percent.
Outlook for fall and 2018
After continuous growth through the early and mid-2010s within the District, coupled with slow but sustained growth in suburban markets, the fall and 2018 will show a slight transition within the D.C. area real estate market.
Counties with substantially lower home prices will continue to appreciate at a faster pace, and supply will continue to increase in previously limited markets. Homes will continue to sit on the market for shorter times with more buyers entering the marketplace with historically low interest rates.
Tim Savoy, a real estate agent with Coldwell Banker Residential Brokerage Capitol Hill, writes an occasional column about the Washington-area housing market. He can be reached at Timothy.Savoy@cbmove.com and on Twitter @SavoyRealEstate.