The spring real estate market in the Washington region often starts way before residents change their clocks for daylight saving time or see their first crocus poke from the earth. This year is no exception, says Justin Levitch, president of the Real Living at Home real-estate brokerage firm in Chevy Chase, Md.
“Buyers have been out searching for weeks, and we’re seeing multiple offers in places where we haven’t seen them before, such as Montgomery Village,” he says.
Multiple offers are a symptom of both high buyer demand and continued low inventory in suburban Maryland.
“Maryland has seen good sales growth this year,” says Nela Richardson, chief economist for Redfin in Washington. “It’s not as competitive as D.C., where homes get 10 offers, but homes often get two or three offers” in the Maryland suburbs.
Montgomery and Prince George’s counties are seeing an increase in home sales compared with this time last year. According to multiple listing service MRIS, year-to-date closed sales in the first three months of 2016 rose by 7.8 percent in Montgomery County and 12.3 percent in Prince George’s County compared with the same period in 2015.
According to MRIS, from March 2015 to March 2016 inventory in suburban Maryland rose 1.8 percent. During that same time, the median sales prices increased 1.7 percent from $284,250 to $289,000.
The market in Maryland has picked up slightly, with the average number of days it takes a home to sell decreasing by 1.4 percent, to 69 days in March 2016 from 70 days in March 2015. These statistics cover two large counties with many submarkets where some homes sell in less than a week.
“The category of homes with the most available listings  in Montgomery County is detached single-family homes priced from $1 million to $2.5 million,” says Jonathan Hill, vice president of marketing and communications for MRIS in Rockville. “The second largest group of listings  is in Prince George’s County for detached single-family homes priced from $200,000 to $300,000.”
Prince George’s County suffered more from foreclosures than other suburban Maryland counties and for a few years had significantly more homes for sale (distressed and non-distressed) than Montgomery County. But since spring 2013, Montgomery County has averaged almost 30 percent more active listings compared with Prince George’s County, Hill says.
“The Maryland market is strong, with a higher percentage of growth in closed sales than D.C. and Northern Virginia,” Hill says. “Northern Virginia had a year-to-date increase of 2.6 percent while D.C. had a 4.3 percent increase. However, the Maryland suburbs had a 9.9 percent jump over the same period last year. One-third of all sales in March were detached single-family homes with four bedrooms. Maryland, especially Prince George’s County, has a bigger supply of affordable homes than the other jurisdictions.”
Richardson says Redfin agents continue to see buyers moving from Alexandria or other parts of Northern Virginia into Prince George’s County to look for affordability.
Levitch says he sees an eastern migration pattern for buyers looking for affordability.
“Often, buyers will start looking at Bethesda and then move north to Rockville, but they find that everything priced under $650,000 is extremely competitive,” Levitch says. “They move toward Kensington, Wheaton and Silver Spring, where their dollar goes further. Many are deciding to move to Hyattsville, College Park and Mount Rainier because they can find walkable communities, their money goes further and the commute into the city isn’t as bad as it is along some other routes.”
Levitch says many buyers start out insisting that they need to be less than one mile from a Metro station and then realize that if they give up that priority, it can open up a lot more possibilities for homeownership.
“Buyers who know they can’t afford Bethesda will go to Rockville and then find they can get more for their money if they go out to Gaithersburg and Germantown,” Levitch says. “You don’t see as many multiple offers in Germantown, but it’s still a healthy market.”
For some buyers, “affordable” means a home less than $1 million.
“The market in Montgomery County is slower for homes that are priced from $1 million to $2 million in Chevy Chase and North Bethesda, but sellers have the upper hand if they can price their home under $1 million,” Levitch says.
Richardson says schools drive the submarkets in the parts Montgomery County closest to the District, with the hottest markets centered on Bethesda and North Potomac, which have highly rated schools.
“Some buyers are moving into the National Harbor and Fort Washington area from D.C. and Virginia because they realize they can get a waterfront home for under $1 million,” Richardson says. “People looking for newer homes on larger lots can find them in Prince George’s County for a better price than in Virginia.”
Levitch fears that competition for listings in Montgomery and Prince George’s counties and continued low inventory for the past four years could push the area into a negative-inventory situation, at least in some of the most sought-after neighborhoods. In that case, agents will need to show prospective buyers their options in other communities.
Unless buyer demand slows or more homeowners decide to sell their property, the solution to low inventory is additional construction of new houses.
“We’re starting to see a lot of new designs that increase density in both Maryland and Virginia,” says Dan Fulton, senior vice president of John Burns Real Estate Consulting, in Reston. “Density has to increase because development has reached all the way to areas that have low-density zoning requirements. The other trend pushing new high-density designs like four-level townhomes is that more people want to live in walkable communities”
Fulton points to the City Home Collection at Crown by Wormald Homes, in Gaithersburg, where the single-family houses have three or four levels with decks and rooftop space instead of a yard.
Four-level townhouses with rooftop decks are available in multiple communities from a variety of builders.
“These townhomes work for families because they have plenty of living space and a roof deck for outdoor space,” Fulton says. “They often have an optional elevator that makes them work for empty-nesters.”
First-time buyers can find townhouses priced in the $300,000s and low $400,000s at Westphalia Town Center, a mixed-use development by Walton International Group in Prince George’s County. Builders include Ryan Homes, Haverford Homes and Mid-Atlantic Builders.
Fulton says buyers willing to make a longer commute will find affordable homes around Frederick. More expensive newly built houses are clustered in Bethesda, particularly high-end condominiums designed to attract empty-nesters who want to live near the shops, restaurants and entertainment in downtown Bethesda.
Whether you’re looking for a resale or a newly built home in Maryland, house hunters need to be ready with their financing in place so they can compete with other prospective buyers for the limited available inventory.
Next week: Virginia market