A Holiday Lull Before the New Year (Dec. 2010 Insider)

Redfin’s monthly Washington & Baltimore Metro Area 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!

As usual, sales activity slowed in the Washington Metro Area as we headed into the New Year, but this time around it looks like more than seasonality was at play. Inventory was down as expected, but we saw prices inching up, indicating that buyers are out there.

We’ll dive into the numbers in a jiff, but first the latest Redfin news: as promised, we launched Redfin in Dallas, with Denver up in the coming week. We now offer our home-buyers an online Deal Room, to guide them through the whole escrow process. And we let you to log-in via Facebook, which will help us personalize your real estate search. Plenty more good stuff is coming up, so stay tuned!

Now, onto the numbers…

Few Homes for Sale

Inventory was down in most areas of the Washington region compared to November by an average of 16%. Brent Roberts, a Redfin agent in DC said, “Sellers who don’t have to sell are choosing to rent their homes or delay moving until they feel the market has recovered. Because of their reluctance to sell, there has been a lack of available homes that are priced appropriately.” Virginia sellers are undergoing a similar mindset. Scott Sabey, a Redfin agent in the Falls Church area said, “Two potential clients I spoke with recently are comfortable waiting until March to put their homes on the market. With the tax credit last year, they wouldn’t have dared to wait that long.”

County Compared to November 2010 Compared to December 2009
Washington Area
Alexandria -14.6% +16.1%
Arlington County -19.3% -10.2%
District of Columbia -14.0% -3.2%
Fairfax City County -32.2% -22.4%
Fairfax County -17.0% -4.7%
Loudoun County -15.3% +0.2%
Montgomery County -14.8% -1.2%
Prince George’s County -2.1% +2.0%
Prince William County -13.3% -0.2%
Baltimore Area
Anne Arundel County -6.8% -1.2%
Baltimore City County -2.9% +2.4%
Baltimore County -6.3% +11.6%
Howard County -10.5% +8.2%

Change in # of Homes (SFH, condos, townhouses) for Sale on December 31st 2010

Loudoun and Prince William Counties are much the same according to Jeremy Cunningham, a Redfin agent active in those regions. Jeremy said, “My clients are holding their cards until the economy turns around and are generally in a wait and see mode. We’re not seeing the number of sellers that need to sell due to relocation since our employment remains stronger than many areas of the country.”

In Baltimore, the situation is pretty different. Inventory dropped, but only by an average of 7%. September Lundeen, a Redfin agent that covers the Baltimore region said, “Some of my clients want to beat the competition by putting their homes on the market now before the spring onslaught.”

Where are all the Buyers?

Sales continue to be slower than we experienced in December of 2009 in all areas except Fairfax City and Alexandria where percentage changes in these relatively small areas tend to fluctuate dramatically.

County Compared to Nov. 2010 Compared to Nov. 2010 Adjusted for # Weekdays Compared to December 2009 Compared to December 2009 Adjusted for # Weekdays
Washington Area
Alexandria -6.0% -10.1% +37.3% +37.3%
Arlington County +10.0% +5.3% -11.2% -11.2%
District of Columbia -16.8% -20.4% -28.2% -28.2%
Fairfax City County +13.6% +8.7% +31.6% +31.6%
Fairfax County -3.8% -8.0% -14.3% -14.3%
Loudoun County -1.8% -6.1% -23.1% -23.1%
Montgomery County -7.8% -11.9% -19.4% -19.4%
Prince George’s County -10.9% -14.8% -26.9% -26.9%
Prince William County -8.9% -12.9% -22.4% -22.4%
Baltimore Area
Anne Arundel County -30.3% -33.3% -38.0% -38.0%
Baltimore City County -25.2% -28.4% -28.5% -28.5%
Baltimore County -0.5% -4.9% -12.0% -12.0%
Howard County -5.9% -10.0% -23.4% -23.4%

Change in # of Homes (SFH, condos, townhouses) That Sold in December 2010

With limited inventory, buyers just don’t have many choices. “For weeks, I’ve had a handful of clients anxious to buy, but because inventory was stale they were forced to wait on the sidelines,” reports Tom Lewis, a Redfin agent in Upper Northwest and Montgomery County.

“Buyers are clearly in a holding pattern right now,” said Brian Herndon, a Redfin agent in Arlington and Alexandria. Low inventory appears to be the leading factor as buyers are beginning to recognize some of the values in the market and in some cases are beginning to feel better about the economy. Buyers are wondering when sellers will finally get off the dime, accept reality and list their home. Jeremy Cunningham said, “I’ve talked to many buyers who just don’t like their options. Last year, we would have been able to show them twenty homes that suited their criteria and fell within in the $400,000 to $600,000 price range. Now it’s down to eight to ten. The choices are just not out there.”

Ready Buyers Pushing up Prices

With the exception of Prince George’s and Baltimore City and County, prices are continuing to increase. Inventory in Prince George’s and Baltimore remains high and is causing the downward pressure on prices. “Until the foreclosures and short sales are worked through in a measurable way, we won’t see any price stabilization for at least a year, if not longer,” said September.

In DC, Fairfax and Montgomery Counties, the heart of the Washington metro area, prices for several months have increased. But we need a reality-check for buyers. “Buyers can’t just look at the price of a comparable home that sold 6 months ago and expect the seller to accept a lower or even the same price. They’re getting out-bid.” Jeremy explains, “There’s a trickle-up effect. As opposed to large price bumps of $10,000 in a neighborhood that we saw in the boom time, we’re now seeing modest increases in the $2,000 to $4,000 range. Final prices are increasing, albeit with smaller gains.”

County Median Price* in
December 2010
Median Price Change
since Nov. 2010
Median Price Change
since December 2009
Washington Area
Alexandria $393,451 -6.6% -1.4%
Arlington County $547,452 +4.3% +8.1%
District of Columbia $462,000 +5.0% +23.6%
Fairfax City County $411,476 +43.2% +23.7%
Fairfax County $404,030 +3.3% +6.9%
Loudoun County $391,740 -2.0% +5.9%
Montgomery County $373,881 -0.5% +11.3%
Prince George’s County $171,318 -9.3% -22.4%
Prince William County $260,831 -2.8% +1.0%
Baltimore Area
Anne Arundel County $303,131 +8.7% +2.9%
Baltimore City County $76,204 -0.8% -22.7%
Baltimore County $204,806 -6.9% -9.9%
Howard County $391,843 +10.9% +7.6%

Change in Median Price of Homes That Sold in December 2010
*Median Price represents a weighted average of the individual median prices for single-family homes, condos, and townhouses. See our spreadsheet for individual breakdowns.

Brent attempts to sum up the market dynamics. “We are consistently experiencing across all DC neighborhoods that sellers are not psychologically ready to take big price hits without letting a lot of time on the market pass. For buyers this means that it’s very rare for a seller to accept an offer more than 6 to 8% below the current list price. Often the best strategy for overpriced homes is to let some time pass without an offer so the seller realizes they are overpriced and drops the list price to within a reasonable range.”

Brian agrees, “When a good deal hits the market, buyers jump and multiple offers abound.” It’s still a game of cat and mouse, often without a clear winner or loser and a lot of uncertainty as to what is truly a “good deal.”

If you want even more data including specific cities, town and neighborhoods, be sure to download our master spreadsheet and dive into all the data you ever wanted. To learn more about how we calculate these numbers, check out our methodology page. If you have any questions or feedback about our report, just leave a comment below.

Best,
Karen Krupsaw
Redfin Washington & Baltimore Metro Market Manager