Last month, the number of DC condos sold plummeted by 32.4% from December. The dip in sales is explained by the fact that many home buyers put their home search on hold for the holidays, but the number of condos for sale also dropped 4% last month. Tom Lewis, an agent on Redfin’s DC team, explains that the local condo market is tricky because most condo buyers in DC are relatively transient, and many of those who bought five or six years ago at the height of the market are now ready to move into a bigger place or out of town. A seller in DC has to factor in agent commissions of up to five or six percent (if they’re not selling with Redfin), as well as transfer taxes tacking on another 1.1% or 1.45% of the purchase price. So before they’re out the door they’re down about 6.5%. “I find that plays a huge role in how sellers price their homes, and I warn buyers that it leaves very little room for negotiations,” Tom said. A condo seller will also compare their offers with the option of renting. “Rents have actually gone down a bit in DC, but not by that much, so if a condo seller isn’t getting the kinds of offers that he’s looking for, becoming a landlord and covering the mortgage for a few years doesn’t sound so bad,” Tom said.
What Tom is seeing fly off the shelves are new construction condos. They are typically priced a little higher, but still competitive with the resale market, so buyers are willing to pay a little more for a brand new home. “Small boutique buildings, like 1793 Lanier Place NW, are so hot on the market that they are selling out before buyers have a chance to go see them.”
Speaking of heat, January was unseasonably warm for home tours as well. According to Tom, “buyers didn’t ease into their home search this winter like they normally do.” In fact, Redfin DC agents took buyers on 43% more tours this January than they did in December, and more tours than any month last year. “The demand is certainly alive and well, but we’re all still waiting to if the sellers follow suit and supply some more options for all the buyers out there.”
For a complete picture of the local market’s most recent stats and trends, download the Redfin Market Report here: Redfin-Washington-Real-Estate-Market-Report-January-2012. Want to know how the DC real estate market is doing compared with the rest of the country? Take a look at the Redfin Heat Index:
*Redfin Heat Index Methodology
The Redfin Heat Index (Beta) uses listings, sales, and price changes to determine the relative “heat” of a given real estate market. We set a baseline Heat Index of 75.0 at 6.0 months of supply and +5 % price change year-over-year.
Every percentage point increase in prices above the 5% baseline will increase the heat index by two points, every percentage point decrease in prices below the 5% baseline will decrease the heat index by two points.
Every one month of supply increase above the 6.0 baseline will decrease the heat index by seven points, every one month of supply decrease below the 6.0 baseline will increase the heat index by seven points.
Here’s the formula:
- MOS = Months of Supply: End of Month Inventory / Closed Sales in the Month
- $YOY = Year-over-year change in the median price per square foot.
- Heat Index = ((MOS – 6.0) * 7) + (($YOY – 5%) * 2) + 75