While housing markets are often discussed on a regional basis, there can be vast differences between adjacent counties as well as between nearby neighborhoods.
Regionally, the Washington area is experiencing price increases as well as slightly fewer sales, and there are indications that the years-long shortage of homes on the market may be easing. But when you look at suburban Maryland’s Montgomery and Prince George’s counties, market indicators are often going in opposite directions.
In both counties, home prices rose in August, but the gap between values in the two areas remains high. The median sales price in Montgomery County was $443,000 in August 2018, up 4.2 percent compared with August 2017, according to Rockville-based Bright MLS. The median sales price in Prince George’s County was $294,950 in August 2018, up 7.3 percent compared with August 2017, according to Bright.
Sellers continue to have the upper hand in both counties, with homes selling quickly — within 17 days in Montgomery County and 18 days in Prince George’s County on average, according to Bright. Another indication of a seller’s market is that buyers are paying an average of 98 percent of the listing price in both counties.
Redfin brokerage’s “Compete Score,” which measures the level of difficulty buyers will encounter in a bidding war, ranks Takoma Park Historic District in Montgomery County at the top with a 90 out of 100. Other highly competitive neighborhoods in Montgomery County include Takoma Park, outside the historic district, (88) and Wheaton (84). In Prince George’s County, the two most competitive neighborhoods are University Park (85) and College Heights in Hyattsville (84).
A limited number of homes on the market has been plaguing buyers for years and continues to have an impact in Montgomery County, where Bright says the number of homes listed for sale declined again by 5.7 percent in August compared with August 2017.
“Inventory is tight in Montgomery County because homeowners aren’t moving if they don’t have to,” says Bryan Kerrigan, a real estate agent with Redfin brokerage. “They’re concerned they won’t be able to find another place to buy, plus the impact of a higher interest rate is even bigger with a larger mortgage. Someone looking at a $1.5 million house may not want to give up a 3.5 percent mortgage rate for a 5 percent rate.”
Rising home prices mean that even people who want to downsize often end up paying more in housing costs if they move, says Kerrigan, especially if they have enjoyed a low mortgage rate.
The number of sales were up in August by 2.5 percent in Montgomery County compared with August 2017, according to Bright. However, pending sales, which are homes under contract that have yet to complete settlement, declined by 5.9 percent during that period, an indication of a slowing market.
“Homes priced in the $300,000 to $500,000 range sell very fast because there’s a lot of demand among buyers for that price point,” says Kerrigan. “Inventory is low across the board in every price range, but at the higher price points the market is a little slower.”
Kerrigan says sellers need to be aware the buyers today are price savvy and less likely to make an offer on an overpriced listing.
“Properties that are priced properly or below market get more views online, more showings and multiple offers,” he says. “The most sought-after homes are near a Metro station or bus route and near walkable amenities such as downtown Bethesda, Rockville Town Square, downtown Silver Spring or Crown in Gaithersburg.”
Buyers looking for new developments will find that prices are typically higher for new construction because the cost of land and supplies is so high, says Ben Sage, director of the Mid-Atlantic Region for Metrostudy, a housing market research company.
“Buyers looking at places like Crown with walkability should expect to pay a premium for that amenity,” says Sage.
At the same time, Sage says, builders aren’t raising prices as much as he expected they might in the face of the housing shortage.
“Relatively few people can afford a house priced above $1 million, even with the high incomes in this area,” he says.
Buyers looking for affordability can find the most options in Prince George’s County, where the number of homes listed in August 2018 was up 8.3 percent compared with August 2017, according to Bright. While the number of sales that closed in August was down 5.9 percent compared with August 2017, the number of pending sales was up 3.2 percent.
“Prince George’s County has a decent amount of homes for sale, especially for first-time buyers,” says Koki Adasi, a real estate agent with Compass real estate. “Places like the Hyattsville Arts District offer an attractive location close to D.C. that’s also walkable to shops and restaurants. In College Park and neighborhoods near Prince George’s Plaza there’s a nice supply of single-family homes priced from $225,000 to $400,000.”
Prince George’s County, one of the hardest hit during the recession and foreclosure crisis, is still recovering, Adasi says.
“Home values have been up over the past few years, but we’re still a few years away from higher price points,” he says.
Move-up buyers who want between one-third of an acre and one acre can find new homes and resales in Bowie and Upper Marlboro for $475,000 to $800,000, says Adasi, which is far more affordable than in other areas in the region for a 4,000-square-foot house and a large lot.
“The fall market should be a little more balanced, with a little less competition among buyers,” he says.