Case-Shiller: Nationwide Markets Simultaneously Bouncing Up

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). For the full source data behind this post, plus seasonally adjusted and tiered price data, hit the S&P/Case-Shiller website. For an explanation of how the Case-Shiller data is calculated, check out their methodology pdf. Also remember that the data released on the last Tuesday of a given month is for the period two months prior (i.e. – June data is released in August).

Here are the basic Case-Shiller stats for the DC area* as of June:

Sixteen of the twenty metro areas tracked by Case-Shiller saw an increase in their respective seasonally-adjusted HPIs between May and June. Only Las Vegas, Detroit, Seattle, and Charlotte still saw seasonally-adjusted drops month-to-month.

Of the eight markets where Case-Shiller data and Redfin service overlaps, only the San Francisco Bay Area has experienced a larger spike in prices than the DC area over the last few months.

Here’s a chart of Case-Shiller HPIs for all the markets that Redfin serves:

Here’s our peak decline chart, in which we line up the peak Case-Shiller HPI value for each of Redfin’s markets, so we can see how long each market has been declining, and how much it has dropped from the peak.

It’s quite noticeable in both of the above charts that almost every city we’re tracking seems to have taken a sudden upward turn with the most recent few months of data. Despite the fact that there was a nearly two year spread in when the various markets hit their peak (Boston in September 2005, Seattle in July 2007), nearly every market appears to have turned a sharp corner to the positive after “bottoming” in March or April.

A commenter on my Seattle site made an astute observation about this phenomenon this morning:

Since it is still essentially true that “real estate is local”, what could cause every city to suddenly and simultaneously reach an equilibrium point where prices reversed course?

Answer: it just so happens that the home buyers’ tax credit was enacted with the American Reinvestment act (stimulus package) effective February 17, 2009. March 2009 was the first full month that American home buyers had the tax credit as an incentive. It changed their behavior and made them buy homes. It also expires on December 1, 2009 unless it is extended.

Once again, government policy is impacting asset valuations. Either we’re seeing a lasting nationwide housing bottom marked by an extraordinarily well-timed tax incentive, or a new “bubblet.” Case Shiller won’t tell us which until 2010.

It remains to be seen whether the NAR’s lobbying efforts to get the $8,000 tax credit extended beyond November will be successful. And even if they do convince Congress to extend it, the effect may be largely diminished. The program may have already pulled forward as many sales as it can during its spring and summer run.

*[Case-Shiller defines Washington DC as the entire Washington-Arlington-Alexandria, DC-VA-MD-WV Metropolitan Statistical Area, which includes all of the District of Columbia and all or part of the following counties: Calvert MD, Charles MD, Frederick MD, Montgomery MD, Prince Georges MD, Alexandria City VA, Arlington VA, Clarke VA, Fairfax VA, Fairfax City VA, Falls Church City VA, Fauquier VA, Fredericksburg City VA, Loudoun VA, Manassas City VA, Manassas Park City VA, Prince William VA, Spotsylvania VA, Stafford VA, Warren VA, and Jefferson WV.]

48% Of Offers Are On Homes With Multiple Bids

In July, almost half of the offers we presented to listing agents were on homes with at least one other offer.

“In northern Virginia, well-priced homes in Arlington, Falls Church and Alexandria are getting a lot of attention from buyers,” says Marshall Park, one of the top buyers’ agents in metro Washington, DC. “Recently, we’ve seen a lot multiple offer situations with bank-owned homes that are priced aggressively.”

Listing agents often price bank-owned homes below market value to attract potential buyers and generate multiple offers. Based on what our clients have been seeing, it’s working for the banks. Recently, one of Marshall’s clients bid on bank-owned house in Arlington. Listed just over $260,000, it is priced to sell and not surprisingly, there were 12 other offers on the home. It will almost certainly sell for at least $300,000.

Tips For Bidding On A Bank-Owned Home

If you’re bidding on a bank-owned home with other offers, Marshall says it’s essential to put your best foot forward:

Make you first offer as strong as possible. Put 2 – 3% down as earnest money, make the closing period as short as possible and don’t ask for closing costs. If you’re making an all-cash offer, drop the financing contingency.

What are your experiences with bank-owned homes?

The Market Wrap-Up For July

Let’s take at look at the numbers for single-family homes and condos that sold between $100,000 and $5,000,000 in July in metro Washington, DC and see how they compare to a year ago.

Washington, DC

• 648 homes sold, up from 506 in July 2008
• The median sales price was $386,000, down from $422,180 in July 2008
• On average, homes sold at 92.95% of the list price, in July 2008 it was 92.85%

Fairfax County, Fairfax City, Arlington County, Alexandria City & Falls Church City, VA

• 2,053 homes sold, up from 1,857 in July 2008
• The median sales price was $410,000, up from $399,000 in July 2008
• On average, homes sold at 94.49% of the list price, in July 2008 it was 92.60%

Montgomery County

• 1,130 homes sold, up from 867 in July 2008
• The median sales price was $375,000, down from $408,000 in July 2008
• On average, homes sold at 92.45% of the list price, in July 2008 it was 91.60%

Prince George’s County

• 720 homes sold, up from 409 in July 2008
• The median sales price was $215,000, down from $283,000 in July 2008
• On average, homes sold at 87.33% of the list price, in July 2008 it was 90.04%

Greater Baltimore: Anne Arundel, Baltimore City & County, Carroll, Harford, Howard

• 2,240 homes sold, up from 2,038 in July 2008
• The median sales price was $259,950, down from $278,000 in July 2008
• On average, homes sold at 90.86% of the list price, in July 2008 it was 91.92%

We pulled the numbers in this post from MRIS.

Dig Deeper Into the Trends

These numbers county-level trends. To see what’s happening in your neighborhood, check out our stats & trends pages.

What Other People Said

Keith’s posts at DC Home and Condo Prices are always insightful and a great place for people looking for data-rich analyses of the market. Check out his July housing report.

DCMetrocentric is excited about the latest report from the National Association or Realtors.

This is our first monthly report on the inventory trends in the DC area. What numbers would you like to see in our August wrap-up?

Two Redfin Agents Are In The Top 10 Of Buyers’ Agents In Metro DC

July was another amazing month for our metro Washington, DC agents. Of the 5,800+ buyers’ agents in the DC area who closed a deal in July, Taylor and Marshall are in the top ten:

*We’re in the process of building Cynthia’s profile page.

When you work with Redfin, you’ll be working with some of the best agents in the metro Washington, DC region. Our DC agents know what’s going on in the market right now because they spend all of their time serving clients: touring homes, writing offers and closing deals.

We pulled these numbers from MRIS, the database for real estate transactions and listings for metro Washington, DC region, and ranked agents who represented home-buyers of single-family homes and condominiums in July based first on number of deals, then by total dollar amount.

It’s Been A Busy Summer

June and July were busy months in the DC area; our clients toured 2,254 homes and our agents presented 139 offers on homes for sale. Our DC team really hit it out of the park and thrilled our clients with fantastic service. To keep up with demand we promoted three agents Cynthia Spencer, Brent Roberts and Dianna Nardella.

We want to give a big thanks to Cynthia, Brent and Dianna, they stepped up and were all-stars in July. They did whatever needed to be done to make sure our clients were happy: they led tours, hosted inspections and negotiated and closed their first deals as Redfin agents. Great job!

Our Clients Love Our Service

We survey every client and track every transaction in a central customer database. For the surveys we received in July from our clients in the metro Washington, DC area:

• 33 clients responded to our customer-satisfaction survey and posted a review online, down from 52 in June.
• 31 of those clients, or 94%, would recommend Redfin to a friend, down from 96% in June.

In these surveys, Redfin asks customers to rate the likelihood that they would recommend Redfin to a friend on a 0-to-10 scale. Customers who rated 6 or higher count as people who would recommend Redfin to a friend.

For more numbers, download the spreadsheet with the data on what happened in July.

Home Sellers Are Asking Buyers For More Financial Information

As lending standards tighten, home sellers in the DC area are asking prospective buyers to disclose more information about their financial status as part of their initial offer on a home. The Washington Post published an article this past weekend on how buyers who provide the sellers with more financial information upfront may have a better chance at getting their offer accepted.

Redfin agent Fernando Ferrufino’s client Fiona Renalds was interviewed for the Post article. Though it has always been common in DC and Maryland for buyers to fill out Financial Information Sheets with their offer on a home, Fiona felt uncomfortable disclosing more private financial information like her bank statement. Fernando helped her offer a compromise. Along with the Financial Information Sheet and her pre-approval letter, she ended up providing a bank statement, but blacked out her account number and only showed that she had the funds to cover her earnest money deposit and closing costs. Fernando explains that “when we were preparing our offer, I informed Fiona that the Financial Information Sheet is optional but that most sellers in DC & MD ask for it and that it could weigh heavily in how they respond or even consider our offer. I went on to advise her that she can provide only the info that she is comfortable disclosing and that some clients in the past have provided just their income, job title and contact info.”

Since 49% of our DC area offers in June experienced multiple bids, it’s important for buyers in competitive situations to put together the “cleanest” offer possible—this can mean disclosing more financial information to ensure the sellers that the deal won’t fall through due to financing problems. Fernando says that he’s “of the mindset that if the seller sees how financially capable the buyer is, then it can work to our benefit in demonstrating our buying strength.” However, this doesn’t mean you have to bare all. Karen Krupsaw, DC area market manager, notes that we advise “our clients to provide as much information as they feel comfortable disclosing and often we do question the need when they are providing a current and accurate bank approval letter.”

Have any of you been asked to provide more financial information than you feel is necessary when making an offer?