A Hush Falls Over the Market (October Insider Report)

Redfin’s monthly real estate insider report draws from our proprietary database of information on homes for sale and that just sold, along with insight from our agents to get a sense of what’s going on in the market right now. If you’d like to receive the report via email, just sign up.

Greetings Redfinnians!

We can all take a deep breath, finally. Unlike the drastic jumps we saw in the market from August to September, we are not seeing dramatic swings between September and October. The key metrics are pointing to trends of the market calming down as we head deep into winter.

Inventory was slightly down across most of the Washington Metro Area with all counties experiencing a decrease of less than 10%. Sales volume was down again this month by an average of 5%, which is a far cry from the 34% average drop we saw last month. It wasn’t a very volatile month for the median price of homes with the majority of counties ending up pretty flat.

With Wisdom Comes Patience

Fairfax County had the biggest decrease in inventory, but it was still less than 10%. Most areas are relatively flat and probably won’t show a lot of movement over the next few months.

County Compared to September 2010 Compared to October 2009
Alexandria -1.6% +34.8%
Arlington County -2.7% -6.6%
District of Columbia +0.9% -12.0%
Fairfax City County +4.3% -14.0%
Fairfax County -9.7% -2.7%
Loudoun County -9.2% +17.0%
Montgomery County -6.2% +12.7%
Prince George’s County -5.1% -8.8%
Prince William County -8.0% +7.0%

Change in # of Houses for Sale on October 31st 2010

“We are seeing a pretty typical fall to winter market,” said Brian Herndon, a Redfin agent specializing in Arlington and Alexandria. “Even appropriately priced listings are staying on the market 30/60/90 days. If sellers want to sell quickly, they need to be very aggressive with pricing.”

“Buyers are more informed than ever,” said September Lundeen, a Redfin agent specializing in Silver Spring. “They know how the market is moving and what constitutes a reasonable price. This means they have the ability to wait in the wings for something truly special and can pounce — with a strong offer — as soon as it comes on the market. If a listing is average, in any way, it stands a good chance of going completely unnoticed.”

A Tale of Two Cities

The usual slowdown in sales volume affected most counties, but the District bucked the trend with an increase in activity of over 20%!

County Compared to Sept. 2010 Compared to
Sept. 2010 Adjusted for # Weekdays
Compared to October 2009 Compared to
October 2009 Adjusted for # Weekdays
Alexandria +30.0% +36.2% +18.2% +23.8%
Arlington County +9.2% +14.4% -8.8% -4.4%
District of Columbia +15.3% +20.8% -1.0% +3.7%
Fairfax City County -15.4% -11.4% -21.4% -17.7%
Fairfax County -21.7% -18.0% -30.7% -27.4%
Loudoun County -29.9% -26.6% -30.8% -27.5%
Montgomery County -10.1% -5.8% -29.5% -26.1%
Prince George’s County -40.6% -37.8% -52.9% -50.7%
Prince William County -21.5% -17.8% -47.1% -44.6%

Change in # of Houses That Sold in October 2010

“The market definitely seems to be cooling down in most areas around the city but up on Capitol Hill you would never know we were entering a slow season,” said Tom Lewis, a Redfin agent in DC. “My advice is if you are looking on Capitol Hill be prepared for multiple offers and competitive situations.”

The scene totally changes once you leave this hotbed of activity. The further away you get from the city the situation is a lot slower and a lot less competitive.

Jeremy Cunningham, a Redfin agent specializing in areas outside of the beltway in Northern Virginia said, “Sellers are responding quickly and aggressively to all offers. Offers that would typically garner a rejection are now getting solid looks and responses. Sellers used to take at least 24 – 36 hours to respond to even the best offers, but now we are getting a response within a couple of hours. Contracts are being submitted and ratified in the same day.”

Banks Step Up to the Plate

Once again, the District is going against the tide of the rest of the Washington Metro Area with a whopping increase of 30.7% in the median price, but this is mostly due to correcting from last month’s drop. The rest of the market is seeing prices staying relatively flat or fluctuating depending on the size of the home sold.

County Median Price in
October 2010
Median $/SqFt Change
since Sept. 2010
Median $/SqFt Change
since October 2009
Alexandria $658,000 -15.2% +3.5%
Arlington County $660,000 +4.4% +4.6%
District of Columbia $762,500 +30.7% +48.6%
Fairfax City County $380,000 -3.5% +2.5%
Fairfax County $517,450 +0.4% +7.1%
Loudoun County $481,750 +0.5% +2.8%
Montgomery County $450,000 +3.3% 0.0%
Prince George’s County $212,000 -3.9% -8.9%
Prince William County $329,900 -3.1% +8.8%

Change in Median Price of Houses That Sold in October 2010

While pricing looks to stay flat for a while longer, Redfin agents have been seeing some interesting trends in the way homes are being sold.

“It’s not uncommon to see homes sit on the market for 30 – 60 days and suddenly sell in a multiple offer situation within days of a significant price reduction,” said Nick Chaconas, a Redfin agent specializing in Montgomery County. “If a seller drops their price by 5% or more, buyers pick up on it right away. With the amount of information available, buyers know how to spot a good deal, and when it comes on the market everyone rushes to the negotiating table.”

Agents across the entire region are practically falling out of their chairs due to the recent surprises in the way banks are handling foreclosure sales. Jeremy Cunningham submitted an offer to Bank of America on Wednesday night and was shocked when he received a response on Thursday morning. When asked if this was a trend across the board he warned, “The responsiveness is on a bank by bank basis. If you are looking at a bank owned home, your first question should be a skeptical ‘who is the bank?’”

Does this mean that banks are now willing to negotiate? Not quite, according to September Lundeen, “Most banks are not going to accept, or even entertain, offers that are significantly below list price, but they are willing to meet concessions such as fixing up the heating and air system before closing.” Nick Chaconas has noticed banks taking an interest in fixing up basic things like busted pipes and damaged drywall, which they would have tried to sell as-is a few months ago.

Who knows, maybe someday we’ll see banks negotiating with the best of them!

If you want to dig into more market data feel free to download our comprehensive spreadsheet where you’ll find county, city, and neighborhood information galore. You can also liven up the place by posting a comment below.

But, before you go, we wanted to let you know that Redfin just launched a bunch of new features including a nifty new way to cluster listings, an interactive Good Faith Estimate, an interactive HUD-1 statement, and an inspector’s report with tell-all photos. We also opened Las Vegas and Austin, so if you know anyone who wears cowboy boots — tell ‘em about Redfin!

Best,
Michelle Broderick, Redfin Analytics Team

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