Buds on the Trees: the Spring Market has Officially Started (March 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!

Welcome to the March Insider report for the DC area. As spring fills the air, buyers and sellers are starting to come together, gaze adoringly into each other’s eyes, and whisper those three little words: “Sign here, please.”

Inventory is creeping up and sales are following suit, but price trends seem to depend on geography.

Spring Selection Better than Winter, Worse than Last Year

The inventory has increased in all areas since last month. Arlington, Loudoun and Fairfax Counties all had increases in inventory above 19%. Montgomery County led Maryland with an increase of 12.7% followed by Howard at 12.3%.

But compared to last year, when the market was fueled by the tax credit, inventory still remains lower, especially in the closer-in areas of Alexandria (-22.6%), Fairfax City (-32.9%) and Fairfax County (-16.1%).

County Compared to February 2011 Compared to March 2010
Washington Area
Alexandria +6.9% -22.6%
Arlington County +19.2% -14.7%
District of Columbia +15.1% -8.5%
Fairfax City 0.0% -32.9%
Fairfax County +19.3% -16.1%
Loudoun County +19.6% -4.2%
Montgomery County +12.7% -10.0%
Prince George’s County +1.8% +1.3%
Prince William County +5.2% -10.3%
Baltimore Area
Anne Arundel County +10.2% -2.8%
Baltimore City +2.1% -6.0%
Baltimore County +6.5% +2.3%
Howard County +12.3% -5.8%

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

The relatively low inventory continues to wreak havoc with buyers under contract. Scott Sabey, a Redfin agent in Falls Church, is experiencing the ripple effect: “The low inventory caused multiple offer situations in my area,” says Scott. “Some of the deals that did get ratified are now coming back with low appraisals, which are a big problem–especially with FHA loans.”

Redfin Arlington agent Rob Wittman sees the inventory as an underlying cause of sellers and buyers disagreeing on repair issues after home inspections. “I think that sellers are aware that inventory is lower, and they insist that buyers accept certain items as-is. A house that I had under contract, which I thought looked to be in below-average condition, had a seller who refused to acknowledge the scope of the repairs. You could tell the poor listing agent was frustrated with her clients but did her best to work on their behalf. We walked away because the repairs were too much for the buyers to take on.”

As inventory rises, we expect buyers to be more willing to walk away from stubborn sellers.

Sales Both Robust & Anemic

Compared to last month, sales volume is up in all areas except Prince George’s County and Baltimore County, which were down 5.5% and 16.8% respectively. The highest increase was in Fairfax City at 150%, but keep in mind that the city has relatively low volume, which means little changes can cause major shifts in percentages.

Other areas with a significant increase in activity were all closer-in, where the market typically rebounds faster and demand is steadier. Sales in the District of Columbia increased by 38.9%, followed by Montgomery County (+31.4%) and Arlington County (+23.7%).

Sales also picked up significantly in the Baltimore area, with Baltimore County posting a 33.3% gain, and Howard County up by 25.1%.

County Compared to Feb. 2011 Compared to Feb. 2011 Adjusted for # Weekdays Compared to March 2010 Compared to March 2010 Adjusted for # Weekdays
Washington Area
Alexandria +3.4% -10.1% -0.5% -0.5%
Arlington County +23.7% +7.6% -28.3% -28.3%
District of Columbia +38.9% +20.8% -20.9% -20.9%
Fairfax City +150.0% +117.4% +25.0% +25.0%
Fairfax County +26.6% +10.1% -17.5% -17.5%
Loudoun County +17.4% +2.1% -32.1% -32.1%
Montgomery County +31.4% +14.3% -12.3% -12.3%
Prince George’s County -5.5% -17.8% -28.1% -28.1%
Prince William County +17.5% +2.2% -20.6% -20.6%
Baltimore Area
Anne Arundel County 0.0% -13.0% -17.9% -17.9%
Baltimore City -16.8% -27.6% -12.6% -12.6%
Baltimore County +33.3% +15.9% -16.0% -16.0%
Howard County +25.1% +8.8% -22.2% -22.2%

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

Although we are seeing clear signs of life in the market, we’re not seeing the robust activity everywhere. In fact, it almost seems like there are two different markets at work; one which echoes the boom years of 2005 and 2006, and another that has yet to shake off the doldrums. Redfin Montgomery agent Nick Chaconas explains:

“Back in 2005 or 2006, a house would go on the market early in the week, we’d have an open house on the weekend, and by Monday afternoon we’d have 3-5 offers in hand. I’m seeing that same situation today. Some of my buyers are writing as-is contracts with little to no contingencies and still paying well over asking price. Just this past weekend, I had a client lose a house that was listed for $310,000, even though he had escalated his bid to $325,000.”

But Nick is also experiencing that other, more anemic market: “The other side of the market is a carry-over from last year, which includes all the picked-thru inventory. Buyers are being far more aggressive on properties that have been on the market for 30+ days. These properties are getting offers below asking price, with requests for sellers to cover closing costs, as well as other terms that favor buyers.”

Buyers & Sellers Both Getting Reality Checks

The dual market is having a similar Jekyll and Hyde effect on prices. Virginia and DC are both seeing price increases, but with the exception of Montgomery County, prices are still down in Maryland.

The District is by far the most robust market, with prices up by 14% from last year. The troubled areas continue to be Prince George’s and Baltimore City, with prices down 21.1% and 35.8% from last year; both markets have higher levels of foreclosures and short sales, which helps explain the drag on prices.

County Median Price* in
March 2011
Median Price Change
since Feb. 2011
Median Price Change
since March 2010
Washington Area
Alexandria $396,437 +7.4% +2.2%
Arlington County $475,983 +8.1% +1.8%
District of Columbia $386,257 +18.8% +14.0%
Fairfax City $330,943 -13.0% -10.6%
Fairfax County $384,525 +5.4% +4.6%
Loudoun County $385,205 -0.1% +1.7%
Montgomery County $339,322 +8.1% +9.3%
Prince George’s County $155,282 -3.2% -21.1%
Prince William County $243,927 +4.7% -8.2%
Baltimore Area
Anne Arundel County $289,944 +0.3% +0.3%
Baltimore City $52,554 -17.0% -35.8%
Baltimore County $196,988 -4.3% -9.6%
Howard County $333,500 -9.7% -2.2%

Change in Median Price of Homes That Sold in March 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.

Tom Lewis, a Redfin Agent in DC, notes that many DC buyers are confused by the national coverage of a depressed housing market. “That’s clearly not the case here,” says Tom. “The new inventory and fear of interest rate increases brought an onslaught of new buyers to DC. Initially, many of the buyers thought they were still in a buyers’ market and crafted their offer strategies based on this perception. They quickly learned that they had to offer list price and sometimes above–with an escalation clause–in order to have a chance of success.”

It’s a different story in other areas, where sellers are the ones getting a reality check.

“In Prince George’s and the eastern area of Montgomery County, it appears that sellers are getting the message,” says Bryan Waters, a Redfin agent in these counties. “Prices here aren’t getting any higher and sellers are accepting offers relatively quickly. They are not holding out for full price.” Bryan adds that “for the first time, I brought along my buyers to present their offer in person to the seller. It was a very old-school way of doing things, but it worked out. Both the seller and buyer were very pleased. It seems that the economic woes are softening the seller’s resolve, at least in some situations.”

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