Montgomery County and Prince George’s County both may be suburbs of Washington, but the two housing markets are very different by nearly every measure, including home prices, the pace of sales and the amount of new construction.
“Montgomery County and Prince George’s County are like mirror images of each other,” says Nela Richardson, chief economist for Redfin real estate brokerage in Washington.
Prices are significantly lower in Prince George’s, where the median home price from January to August 2016 was $250,000, up 8.7 percent from that same period in 2015, according to Rockville-based multiple-listing service MRIS. In Montgomery, the median sales price for that same period was $410,000, up 2.5 percent from 2015.
“When you can find homes of similar size in Prince George’s County at half the cost of homes in Montgomery County, consumers need to think carefully about where they want to live,” says Richardson. “There’s beginning to be some consumer sentiment questioning whether the Montgomery County school system is really worth paying that much of a premium in housing expenses.”
Inventory remains extremely tight in Montgomery, says Jonathan Hill, vice president of marketing and communications for MRIS, with demand continuing to exceed the supply of homes for sale. Current months’ supply of inventory is only 2.6 months. A balanced market usually has between four and six months of available inventory.
Hill says listings in Montgomery have declined dramatically, with single-family home listings down 15.8 percent, townhouses down 28.4 percent and condos down 6.6 percent in August 2016 compared to August 2015. Single-family home listings are down 14.4 percent in Prince George’s, and condo listings declined 17.0 percent in August 2016 compared to August 2015., Townhouse listings are up slightly, just a 0.6 percent increase over last year.
One measure of demand for houses is to compare the list price to the actual sales price. In Prince George’s, the ratio of list price to sales price was 100 percent in July, meaning that on average sellers are getting their full asking price, says Hill. In Montgomery, that same ratio in July was 92 percent, meaning competition is somewhat weaker there than in Prince George’s.
“Prince George’s County is really experiencing more demand because the prices are much more affordable there and yet neighborhoods are still within commuting distance of the city and Alexandria,” says Richardson. “Price constraints and the desire for more square footage makes people more interested in that county.”
The number of homes sold in Prince George’s rose 13.6 percent, from 5,173 in July 2015 to 5,876 in July 2016. In addition, Hill says, the number of pending sales, a leading indicator that counts signed contracts that have yet to go to settlement, has exceeded the number of active listings every month in the county since February 2012.
“Prince George’s County was slower to recover from the housing crisis, but now there are far fewer distressed sales on the market there,” says Hill. “The number of available distressed properties declined by 32 percent between July 2015 and July 2016.”
The price range with the most listings in Prince George’s for detached single-family homes and attached townhouses is $200,000 to $300,000, says Hill. For condos, the price range with the most listings is $100,000 to $150,000.
“Even though prices are rising faster in Prince George’s County than any other local jurisdiction, they are still more affordable there than anywhere in the D.C. area,” says Hill. “That’s what makes them so attractive to buyers.”
By contrast, the price range with the most single-family home listings in Montgomery is $1 million to $2.5 million. However, the price category with the most listings of both attached townhouses and condos in that county is $200,000 to $300,000.
Low inventory and a lack of new construction are keeping the pace of sales a little slower in Montgomery than in Prince George’s, too. In Montgomery, the number of homes sold January through July rose by 7.8 percent, while in Prince George’s, the number of homes sold increased by 13.6 percent, says Hill.
The contrasts between the two suburban Maryland counties extends to new construction.
“Prince George’s County is one of the two top counties in Maryland for new construction, just slightly behind Anne Arundel County,” says Ben Sage, director of Metrostudy’s Mid-Atlantic Region in Chantilly, Va.
Sage says construction started on 1,338 new houses in Prince George’s during the first two quarters of 2016, while 1,343 were started in Anne Arundel during that same period.
In Prince George’s, 750 of those new properties were single-family homes, while 522 were townhouses and 66 were condos. Sage says the heart of the new construction market, with the most houses available in that price range, is $400,000 to $500,000 for single-family homes and $300,000 to $400,000 for townhouses.
“A lot of buyers are interested in the new townhouses in Prince George’s County because they are almost the same price as a small 20-year-old single-family house but they have the design that people want today,” says Richardson.
Sage says the majority of new construction in Prince George’s is taking place in Upper Marlboro, particularly in the large Westphalia development. Other big developments include Fairwood East in Bowie and Woodmore Towne Centre in Glenarden. He says some additional new construction is underway in College Park and Capital Heights.
In Montgomery, construction began on 1,105 new homes during the first two quarters of 2016.
“Montgomery County used to be a top county for new construction, but land is expensive in the county,” says Sage. “Some builders are going past Montgomery to Frederick County to build homes there.”
Sage says that since January, the majority of construction in Montgomery has been townhouses, particularly those priced between $400,000 and $500,000. Most of the new single-family homes in Montgomery are priced between $500,000 and $800,000, although single-family homes close to the city, near Metro stations and in downtown Bethesda are far more expensive.
Buyers looking for more affordable homes will find more available in Prince George’s than in Montgomery and may want to expand their search territory to Frederick, Anne Arundel, Howard and Charles counties, depending on where they work and their willingness to commute.