Buyers Quiet Till Inventory Improves (Jan. 2011 Insider Report)

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Greetings Redfinnians!

The big real estate news in January is inventory–or rather, the lack thereof. Inventory is on the decline across the Baltimore/Washington region, both compared to a year ago and compared to December. Bucking the overall trend, Baltimore County experienced an increase–up 9.2% since January 2010–but even with that jump, “the supply appears relatively low,” says Taylor Connolly, Redfin agent covering the Baltimore area. “There are not enough quality homes–a lot of fixer-uppers are contributing to a very stale supply,” he explains.

Low Inventory Frustrates Buyers

County Compared to December 2010 Compared to January 2010
Washington Area
Alexandria -11.5% +2.0%
Arlington County -4.0% -13.8%
District of Columbia -4.3% -1.4%
Fairfax City 0.0% -32.5%
Fairfax County -9.4% -9.9%
Loudoun County -6.2% -5.7%
Montgomery County -4.1% -0.6%
Prince George’s County -5.9% +2.8%
Prince William County -7.1% -1.9%
Baltimore Area
Anne Arundel County -2.7% -1.2%
Baltimore City -6.3% +2.4%
Baltimore County -4.6% +9.2%
Howard County -7.1% +2.0%

Change in # of Homes (SFH, condos, townhouses) for Sale on January 31st 2011

The low inventory in Fairfax County–down 9.4% since December–is also causing additional pressure in competitive offer situations. Rob Wittman, a Redfin agent in Fairfax and Arlington, reports: “Three out of my last five offers were in competitive situations, but my buyers are not willing to pay an arm and a leg just because there are others interested in the house.”

Many of today’s sellers are in a difficult position, mainly due to unrealistic expectations. “My clients want to sell and are realizing that what they paid in the early 2000s is not necessarily what they can get today,” reports DC-area Redfin agent Tom Lewis. “Over the recent weeks I’ve met with several people, all interested in listing. It’s a tough call for them to decide whether to rent or sell their home.”

Lousy Selection Leads to Slow Sales

The Baltimore/Washington region experienced a substantial decline in sales volume from December to January, with decreases in the number of homes sold ranging from 23.5% to 46%. Agents across the board blame the low sales volume on the low inventory. Marshall Park, Redfin agent in Fairfax and Alexandria, is working with several understandably frustrated buyers: “One of the listings that just came on the market was priced at $725,000, and the lowest offer on the table was in the $800,000s. We needed to be in the $820,000 range just to have a shot at the house. My clients were not in a position to go for this escalated price.” If there were more homes on the market, we wouldn’t be seeing such competitive bidding wars.

County Compared to Dec. 2010 Compared to Dec. 2010 Adjusted for # Weekdays Compared to January 2010 Compared to January 2010 Adjusted for # Weekdays
Washington Area
Alexandria -38.0% -32.1% -15.0% -15.0%
Arlington County -43.9% -38.5% -16.5% -16.5%
District of Columbia -31.8% -25.3% -21.9% -21.9%
Fairfax City -26.9% -20.0% +5.6% +5.6%
Fairfax County -46.2% -41.1% -27.3% -27.3%
Loudoun County -39.1% -33.3% -17.0% -17.0%
Montgomery County -34.2% -27.9% -21.9% -21.9%
Prince George’s County -23.5% -16.2% -24.0% -24.0%
Prince William County -35.8% -29.7% -19.8% -19.8%
Baltimore Area
Anne Arundel County -40.6% -34.9% -12.8% -12.8%
Baltimore City -37.2% -31.3% -13.7% -13.7%
Baltimore County -35.9% -29.8% -24.1% -24.1%
Howard County -44.9% -39.6% -42.4% -42.4%

Change in # of Homes (SFH, condos, townhouses) That Sold in January 2011

Contributing to the slow sales pace is the fact that buyers are not willing to settle for just any old house. “Buyers are becoming even more particular in DC,” reports Leslie White, a Redfin agent in the DC market. “I’m noticing more and more buyers without cars, and bike access is critical. Recently, one of my clients took practice rides from their office to the homes they were considering. We didn’t see this kind of scrutiny last year during the time of the tax credit incentive.”

The real question on everyone’s mind: When are sellers going to start listing homes at prices that are more attractive to buyers? “Sellers are ultra edgy,” says Jeremy Cunningham, a Redfin agent in Loudoun County. “They’re disappointed in the price that they can list for and are just not budging. When we present a low offer based on comparable sales, even the listing agent is angry. They just don’t want to disappoint their sellers or appear that they misjudged the market. All of this contributes to the huge decline in sales across the board.”

“Two Markets” Show Distinctly Different Price Trends

County Median Price* in
January 2011
Median Price Change
since Dec. 2010
Median Price Change
since January 2010
Washington Area
Alexandria $380,370 -1.7% +6.5%
Arlington County $444,588 -17.6% +2.5%
District of Columbia $412,336 -4.4% +14.7%
Fairfax City $395,000 -2.6% +21.1%
Fairfax County $387,495 -1.8% +5.1%
Loudoun County $351,489 -10.6% -0.1%
Montgomery County $340,978 -5.8% +10.2%
Prince George’s County $178,363 +3.6% -8.9%
Prince William County $240,156 -7.6% +3.7%
Baltimore Area
Anne Arundel County $296,600 +0.8% +2.7%
Baltimore City $71,716 -4.3% -7.8%
Baltimore County $204,948 +2.7% -8.2%
Howard County $359,657 -7.5% -2.4%

Change in Median Price of Homes That Sold in January 2011
*Median Price represents a weighted average of the individual median prices for single-family homes, condos, and townhouses. See our spreadsheet for individual breakdowns.

On the pricing front, the market continues to stay strong in the closer-in areas of DC (+14.7%), Montgomery (+10.2%), Fairfax (+5.1%) and Alexandria (+6.5%), all with solid price gains since January 2010. Jeremy continues to see a tremendous chasm between prices in the farther-out areas compared to areas inside the beltway: “I’m advising my clients that there appears to be two markets out there–the outer band and inner band. The farther-out areas are starting to stabilize at or slightly below last year’s prices, while prices in areas closer to DC are increasing.”

Taylor says the uptick in interest rates is having an effect in the Baltimore area: “It’s taken away the urgency. Basically, clients are in no rush because they don’t feel confident that prices have bottomed out. Foreclosures are still putting a drag on prices.” Rob agrees: “Spring has definitely not arrived. I don’t think we’ll have the usual big swing as in prior years. Sellers are just not motivated, and we won’t see the surge in inventory that we need to satisfy potential buyers.”

That’s the big picture. Want to know what’s happening in your neighborhood? Download our comprehensive spreadsheet and dig into the data for yourself! Inside you’ll find county, city, and neighborhood information galore. To learn more about how we calculate these numbers, check out our methodology page. You can also liven up the place by posting a comment below.

Best,
Karen Krupsaw
Redfin Washington & Baltimore Metro Market Manager