Remember the scene in “Animal House” where Kevin Bacon pleads with everyone not to panic – and gets trampled when they panic anyway?
Lisa Sturtevant might be able to relate. She’d be Kevin Bacon in this scenario.
Sturtevant is chief economist of Bright MLS, which each month details home sales across the region. And while some have begun to wonder if it is, indeed, time to panic over a potentially stalled local real-estate market, she suggests taking a breath and looking at the big picture, good and bad. And there’s some of each.
“In the months to come, expect housing-market activity to be slower than the frenzied pace of last year,” Sturtevant (who previously served as chief economist for Virginia Realtors) said as May sales figures were reported by Bright MLS on June 14.
Yet despite some prospective buyers heading back to the sidelines, or never getting off them in the first place, owing to rising home prices and spiking interest rates, inventory remains low, which should maintain equilibrium in the local market.
“Home prices in the Washington area will continue to rise, but price increases will be lower than they have been,” Sturtevant said.
In May, 6,807 home sales closed across the Washington region, down 11.6 percent from a year before, based on data provided by MarketStats by ShowingTime based on listing activity from Bright MLS. The figures include sales in Arlington and Fairfax counties and the cities of Alexandria, Fairfax and Falls Church in Virginia; Montgomery, Prince George’s and Frederick counties in Maryland; and the District of Columbia.
For much of the past 12 months, declines in year-over-year sales were explained as due to tight inventory limiting options for buyers. That remains the case to a degree, but the feeding-frenzy mentality of many prospective buyers has clearly dissipated.
(May home sales represent those that went to closing during the month; because of the lag time required for the closing process, many of those deals were consummated in April or even March.)
Year-over-year sales were down in all regional jurisdictions except the small city of Fairfax, where they were up slightly, and the even smaller city of Falls Church, where they were flat. Fairfax County posted a double-digit decline, off 11.3 percent to 1,754 sales, while Arlington and Alexandria were down but by lesser amounts (1.9 percent and 3.9 percent, respectively).
Median home sales prices, however, continued to rise in all areas but two. The median sales price for homes that went to closing in May was $605,000, up 8 percent across the region.
The decliners were Arlington, where the median price declined 6.7 percent to $676,200, and the District of Columbia, off 5.3 percent to $650,000.
One way to judge the buyer-seller balance in the market is the months of supply on the market, which compares total inventory to the preceding month’s sales total. Generally, anything less than 3 months’ worth of inventory is seen to be a pro-seller environment.
Across the region at the end of May, there was a 0.95-month inventory, down from a year ago. The District of Columbia (2.02 months’ worth) and Arlington (1.23 months) had the highest totals, although most other jurisdictions remained under a month of inventory.
Local markets are “still competitive,” Bright MLS said in its evaluation of the data, although adding the caveat “for now.”
“While there are headwinds in the housing market, including rising mortgage rates and affordability challenges, the Washington market has been very strong,” the analysis offered.
Homes that went to closing in May spent a median of just six days between listing and ratified contract – although it’s again worth noting that those consummations largely occurred two months ago.
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