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How’s Our Market Performing? Our 2018 Mid-Year Update

In this market outlook we review the most recent available data on the D.C. Metro area’s real estate market performance during the first half of 2018.

We focus on the following metrics:

  • Sales
  • Prices
  • Inventory
  • Property Type Performance
  • Area Income & Employment

Unless otherwise cited, we refer to data compiled by Real Estate Business Intelligence.

We will present a summary of the key facts by analyzing this data, as well as provide a digest of what this data and the first half of 2018’s market conditions mean for you.

Sales

Growth in total sales volume for the D.C. Metro area has fluctuated recently. In May, total sales volume increased by 4.8% year-over-year, but total sales volume decreased slightly (by 2.3%) year-over-year in June.

New contracts have decreased recently. In May, new contracts dropped by 2.7% year-over-year to hit 6,487, and in June new contracts dipped by 2.0% to hit 5,844. However, these numbers still remain well above both the 5-year average (5,657) and 10-year average (5,081).

Recent closed sales have also fluctuated in recent months. In May, they increased by 1.8% year over year, hitting 5,720 in total, and reaching the highest May level of this decade. However, despite increasing month-to-month, closed sales dropped by 4.1% year-over-year in June (reaching 5,889).

However, properties are overall selling faster year-over year. In May, the median-days-on market for the D.C. Metro area was nine days (down from 10 days last year), and in June, the region produced a median-days-on-market of 10 days (down from 12 days last June).

Sales Summary: In the first half of 2018, we received mixed messages when it comes to sales in the D.C. Metro area. However, across a long-term view, our market continues to outperform its averages, and properties continue to sell faster than ever, if not always at the same high volumes as last year.

Prices

While sales presented mixed messages regarding the D.C. Metro area, prices made a single clear statement: they continue to go up, and hit new records.

In May, the media sales price for a home in the D.C. Metro area hit $465,00. At the time, this was the highest May price of the decade, and offered a 1.1% increase over last year’s record-setting May prices.

Then, June set another new record. The media sales price for the Metro area hit $471,000, up 3.5% year-over-year, and breaking our region’s previous June record.

Median sales price in Washington D.C. itself climbed to a huge $603,375— up by 2.3% since last year’s June median sales price of $590,000. However, the biggest year-over-year growth occurred in Fairfax City (whose median sales price grew by 25.0% year-over-year) and Falls Church City (whose prices increased 17% year-over-year), who saw median sales prices of $625,000 and $849,500, respectively.

Price Summary: Despite mixed messages in sales data, prices in the D.C. Metro area have hit new highs in 2018. The median sales price in D.C. also continues to climb year-over-year, and has exceeded $600,000.

Inventory

As prices increase, inventory levels continue to drop. In May, active listings decreased 4.8% year-over-year. In June, active listings dropped by 6.4%, making June the 26th consecutive month where year-over-year inventory levels have declined. In June, there were only 9,805 active listings in the D.C. Metro area, down from 25,618 listings at their peak, reached a decade ago in 2008.

Developers are attempting to solve this inventory problem. In June, our region saw 7,346 new listings— up from our ten-year inventory low of 5,588 new listings in June 2012. However, despite these efforts, our year-over-year inventory continues its overall decline. In June, new listings dropped by 5.8% year-over-year (and dropped by 11.8% compared to May).

Inventory Summary: Our region’s inventory continues to decline sharply. New development is not keeping up with demand, with both our active and new listings declining month-to-month, and year-over-year.

Property Type Performance

The data segments sales into three property types—Townhouse, Condos, and Single-Family Detached Units.

New contracts for condos increased by 2.6%, year-over-year, in June, though both Townhouses and Single-Family Detached Units saw a drop in new contracts year over year (by 2.5% and 4.2% respectively). Closed sales declined for all property types. Closed sales of Townhouses declined 2.8%, Condos declined 3.4%, and Single-Family Detached Units declined 5.1%.

Prices increased for all property types. Condo prices increased by 4.8% year-over-year. Median sales price for both Townhouses ($442,000) and Single-Family Detached Units ($600,000) both hit all time highs, increasing by 4.0% and 4.4% year-over-year, respectively.

Inventory levels—for both new and active listings—decreased across the board. For active listings, Townhouses dropped 4.6%, Single-Family Detached Units dropped 7.0%, and Condos dropped 6.8%. For new listings, Townhouses dropped 5.9%, Single-Family Detached Units dropped 6.7%, and Condos dropped 4.2%.

Townhouses remain the fastest-selling property type, with a median-days-on-market of only eight days. (Single-family detached units had a median DOM of 11 days, and condos both had a median DOM of 13.)

Property Type Performance Summary: All three property types performed roughly the same, seeing big increases in price, and big decreases in inventory for Condos, Townhouses, and Single-Family Detached Units.

2018 Mid-Year Summary: What This Data Means for Your

Despite a few interesting fluctuations in terms of sales data, the D.C. Metro area continues to perform strong. Home prices continue to increase and hit new records, while inventory continues to decrease, as it has month-to-month for over two years straight. Even with new units coming online, our increasing prices and decreasing inventory make it clear that our market continues to fail to provide enough supply to meet our growing demand.

In short: the data indicate that the fundamentals of our market remain strong, and continue to create opportunity for developers, as our demand continues to outpace even recent efforts to create some sort of equilibrium in our market.

While our market’s hot streak may appear a little bit cooler than it did at this time last year, opportunities continue to heat up for developers interested in taking advantage of them. At Evergreen Private Finance, we work every day to help borrowers, brokers, and investors make the most of current market conditions. And the market data indicates we continue to operate within a particularly opportune moment in D.C.’s real estate market.

Contact us today to discuss how we can all make the most of these opportunities.  Call us at (202) 713-9072, or email us at info@nullevergreenprivatefinance.com, to discuss how we can work together to create a diverse, livable city for all our residents.