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How’s Our Market Performing? Our Q3 2018 Market Update

In this market outlook we will review the most recent available performance data on the D.C. Metro area’s residential real estate market during Q3 of 2018.

We will focus on the following metrics:

  • Sales
  • Price
  • Inventory
  • Property Type Performance

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

We will present a summary of the key facts by analyzing these data, as well as provide a digest of what these data mean for you.

Sales

Year-over-year total sales volume in the D.C. Metro area increased in both July and August (by 2.8% and 4.1%, respectively), but ended the quarter by dropping by 7.0% in September. Last month also saw both year-over-year closed sales and pending sales drop significantly (by 10.0% and 7.6%, respectively). Closed sales and pending sales both hit their lowest September values since 2014.

However, sales in D.C. proper did not drop as much as they did across the Metro as a whole. Year-over-year, closed sales in D.C. only dropped by 3.8%, and pending sales dropped by 6.2%.

In addition, while fewer homes sold to close this year’s third quarter compared to last year’s Q3, those homes that did sell actually sold faster. Median days on market for a home in the D.C. Metro dropped by three days, to 17 days total, this last September, and remained far below both the 5 and 10 year averages (of 23 days and 27 days, respectively).

Sales Summary: Despite steady year-over-year growth in July and August, all sales figures took a significant hit in September. In addition, total sales volume, closed sales, and pending sales in the Metro Area all underperformed our region’s five-year average, and both total sales volume and closed sales underperformed our region’s ten-year average.

Price

While our region’s Sales volumes ended the quarter on a down note, prices have continued to climb. We saw significant year-over-year price increases for both July and August (by 3.4% and 2.8%), and both months saw their highest prices of the last 10 years. Metro area prices performed even better in September, where they increased by 3.7%, year-over-year, and hit their highest September levels on record, of $420,000.

Prices in Washington D.C. itself experienced a negligible year-over-year dip in July (-0.1%), only to surge in August and September. In August, median sales prices increased year-over-year by 2.8%, and in September they increased, year-over-year, by 4.8%, hitting $525,000.

Price Summary: Despite drops in Sales, our region and our city’s prices continue to hit new highs. The D.C. Metro Area closed out Q3 with a median sales price (of $420,000) that sat well above both our region’s 5-year and 10-year averages of $402,980 and $375,990, respectively.

Inventory

Inventory levels continue to decline in the D.C. Metro Area.

In July, active listings declined 6.4% year-over-year. In August, active listings declined 1.8% year-over-year. And in September, active listings declined by 3.3%, closing out Q3 with the 29th month in a row that year-over-year active listings have declined. Overall, active listings hit 10,539 units, lower than both the 5-year average and the 10-year average (of 11,533 and 12,361).

New listings tell a slightly different story. They saw a 1.6% year-over-year increase in July, a 3.0% year-over-year increase in August, but then a 3.3% year-over-year drop in September, ending the quarter below the 5-year average.

Inventory Summary: Our overall inventory levels continue to decline significantly. While we continue to see more new inventory coming online—as has been occuring in phases all year—we still do not see enough coming online to break our multi-year streak of demand outstripping supply.

Property Type Performance

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

In September, new contracts dropped for each property type. New contracts dropped 8.5% for Single Families, by 5.1% for Condos, and by 8.6% for Townhouses. Closed sales also dropped for each property type in September. Closed sales dropped 12.6% for Single Families, 8.4% for Condos, and 7.3% for Townhouses.

By contrast, Prices increased for each property type in September. They increased by 6.2% for Townhouses, by 5.5% for Condos, and by 2.4% for Single Families.

For the most part, inventories decreased across the board for all three property types, in both inventory categories, at the end of the quarter. New listings dropped by 3.9% for both Condos and Single Families, and by 1.7% for Townhouses. Active listings dropped for both Single Families and Condos (by 5.1% and 4.0%), while active listings of Townhouses increased by 2.3%.

Property Type Performance Summary: Overall, the performance of all three property types closely mirrored the performance of the Metro Area market as a whole, with no single property type significantly outperforming any of the others.

Q3 2018 Summary: What This Data Means for You

While sales took a hit in September, there is little reason to believe that this had, or will have, a significant impact on our market moving forward. Sales have generally been increasing throughout the year, and considering the fact that prices continue to rise and overall inventory continues to decline, this one-month dip in sales appears to be an anomaly. There are many factors that can go into sales volume, and our overall increases in price and decreases in supply appear to suggest that last month’s dip was not due to any significant decline in regional demand.

Overall, our market continues to power forward, though, as we noted in our mid-year update, it continues to perform slightly cooler than last year’s. This does not appear to be any cause for concern, and simply appears to reflect the normal month-to-month and year-to-year fluctuations that occur within even the hottest markets.

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.