Case-Shiller: DC Home Prices Buck National Trend in December

It’s time for our monthly check-in of the S&P/Case-Shiller Home Price Indices (HPI). The Case-Shiller data is generally considered to be the most reliable measure of overall home price changes for a region, since they only consider repeat sales of homes when calculating their index, instead of looking at all the homes that sold in a given month.

For the full source data behind this post, hit the S&P/Case-Shiller website. For a more detailed explanation of how the Case-Shiller Home Price Index 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. – December data is released in February).

Here are the basic Case-Shiller stats for the Washington area* as of December:

Ninteen of the twenty metro areas tracked by Case-Shiller saw a decrease in their HPI between November and December (the same as October to November). Washington DC’s 0.4% increase was the only month-to-month gain. In November there were four markets posting year-over-year gains. In December that number dropped to two: San Diego and Washington DC.

Here’s a look at the latest local tiered data, back through 2000:

And here’s a closer look at the recent changes, with the vertical and horizontal axes zoomed in to show just the last year:

The low tier lost ground in December, and the middle tier pretty much carried the market up. Month to month, the low tier was down 0.4%, the middle tier rose 0.7%, and the high tier increased 0.1%.

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

Redfin’s monthly Washington and Baltimore 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!

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

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.

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

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

Nine Redfin Agents Rank in the Top 30 DC-Area Buyers Agents

Nine Redfin Washington Metro & Baltimore agents finished in the top 30 out of the 9,000+ buyers agents in the area in the fourth quarter of 2010.

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

Five more of our Baltimore-Washington, DC area agents closed deals in the fourth quarter of the year:

When you work with Redfin, you get great customer service while working with some of the most successful and active agents in the region.

Most agents spend around 80% of their time finding new clients, but Redfin agents don’t need to prospect since folks come to us on Redfin.com. As a result, Redfin agents can spend all their time serving clients: answering questions, hosting home tours, writing and negotiating offers, and listing homes. Redfin agents are experts in today’s market because they spend more of their time negotiating and closing deals, not making sales calls.

Our Clients Love Our Service

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

• 182 clients responded to our customer-satisfaction survey and posted a review online.
• 176 of those clients, or 97%, would recommend Redfin to a friend.

In these surveys, we ask 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. To learn more about how we survey our clients and calculate the customer ratings, check out our FAQ on agent reviews.

*These numbers do not include deals never listed on the MLS