Quarterly market update - Fourth quarter portends more concessions, slower appreciation
In its Quarterly Economic and Market Watch Report, Metropolitan Regional Information Systems, which operates the Multiple Listing Services (MLS), chronicles a period in which properties remained on the market longer than one year earlier as prices continued to rise while falling below asking prices.
According to Senior Research Forecast Lawrence Yun, local homes sales fell 7.4 percent during October, November and December. For the year, there was 4.9 percent growth in unit sales, to 199,768, and home prices rose by 14.8 percent versus 9.5 percent in 2004. A typical price was $345,400. “In 2006, the local job gains could total 80, 000,” Yun writes. “But home sales will likely fall by 3 percent due to higher mortgage rates. Similarly, the local region will see slower price growth – of about 7 percent. The outlook for 2006 looks brighter with home sales set to rise on the back of local job gains.”
Chief David Lereah, chief economist of the National Association of Realtors (NAR), predicts in the report that home sales and housing starts will drop by 5 percent and 8 percent, respectively, in the country. “I also expect home price appreciation to slow to 6 percent this year from a cyclical high. . . Notice, the housing sector is expected to experience a soft landing this year, rather than experience some ‘bursting’ of balloons.” Lereah adds that “there will be no sharp price drops or other negative events coming from the housing sector.”
It is the view of Ken Fears, NAR economist, that demand will shrink and homes will sit on the market longer because of declining affordability and increasing inventory. “Consequently, downward price pressure will develop, forcing sellers to make concessions [and] causing a decline in the ratio of sale price to list price in order to meet buyers’ ability to finance their purchase.”
Among the reasons Fears lists to explain an increase in concession is his speculation that realtors may be advising sellers to list their properties high “to boost up the sale price by listing well above comparable sales prices and accepting a slightly lower selling price that is still above the current comparables.” Second, he suggests that realtors may not have caught up with market changes. “Finally, if the market is truly oversaturated and has been stagnant for a protracted period, the only way to move homes may be to accept prices below recent realized sale prices,” Fears continues. “This last scenario is one in which there is a true concession.”
The economist goes on to note that days on the market went up by 4.7 days to an average of 40.5 from the fourth quarter of 2004 to that quarter last year. “Over this same time period, the area . . . has seen an increase in the concession of 0.5 percentage points.” (The concession ratio dropped from 99.1 percent, meaning that the sales price was that percent of the list price.)
“. . . It is too early to tell at which stage of the concession cycle we are in,” Fears equivocates. “Concession will likely rise as the supply of homes increase and days on the market expand; however, we haven’t seen a sharp increase in either as of yet. Concessions have likely increased slightly, but this is due to problems estimating initial prices by realtors. As realtors get used to a more stable market, their pricing will improve and concessions will shrink, but the long-term trend will be to an expansion of concession in order to move homes. Regardless, concessions and days on the market will rise, but this trend will only help to bring about a more equitable market, improving prospects for buyers. . .”
Prices of sold properties climbed from $535,100 from the third quarter last year to $558,000 in the fourth as homes on the market dropped from 2,973 to 2,559 and properties that went to settlement fell from 2,443 to 2,063. At the same time, the average number of days on the market grew from 23 to 29.
The highest average price by far occurred in zip code 20007, which reached $1,203,100, up 34.2 percent on the sale of 147 homes. Way behind were prices that averaged in the $700,000s. In 20008, the average went up 13.6 percent to $765,300. In 20015, it was $775,300, off 3.5 percent. In 20016, prices slipped 5.3 percent to $761,600. And in 20037, a 37.6 percent increase attained an average of $781,100. The lowest prices were in zips 20019 ($235,500); 20032 ($208,800); and 20374 ($195,000).
Showing the biggest price gains were zips 20007 (34.2 percent); 20019 (34.9 percent) to $235,500; 20020 (35.9 percent) to $241,000; 20032 (31.8 percent) to $208,800; 20037 (37.6 percent) to $781,100; and 20307 (75.5 percent) to $549,800. The biggest declines were in 20006 (75.4 percent) to $203,300 and in 20004 (11.3 percent) to $505,800.
The zip codes with sales during the quarter of approximately 200 or more were 20002 (194); 20009 (278); and 20011 (212). Those zips with the biggest gains in sales were 20004 (240 percent) and 20307 (33.3 percent), but most posted losses in activity. The biggest decreases were in 20001 (40 percent); 20002 (29.2 percent); 20009 (20.3 percent); and 20016 (36.3 percent).
Average days on the market soared above 30 in the following zip codes: 20004, 20006, 20007, 20012, 20016, 20037 (77 days on the market) and 20307.
Although sold prices in the overwhelming majority of zip codes were within one or two percentage points of list prices (see Ken Fears above on concessions), notable exceptions occurred in 20006, which had an average of 95.1 percent of the asking price; 20007, (95.6 percent); 20024 (97.3 percent); and 20307 (93.7 percent).
On sales that plunged from 4,534 in the third quarter of 2005 to 3,374 in the fourth quarter, the average price dropped from $531,300 to $515,400. Days on the market rose almost 50 percent from 19 to 28.
The highest average prices were in zip codes 20815 ($1,048,600); 20854 ($1,057,500); 20862 ($1,041,300); and 20862 ($1,041,300). The lowest ranged between $352,300 (20879) and $389,700 (20906).
Zips with the biggest price gains were 20868 (147.2 percent) and 20839 (148 percent), but they were on small bases below 5. Others with increases above 25 percent were 20852, 20862, 20872, 20877, 20895, and 20833. Declines in sold prices occurred in zips 20815 (36 percent); 20816 (23.3 percent); 20817 (30.6 percent); 20832 (35.9 percent; 20837 (12 percent); 20842 (32 percent) and 20896 (21.5 percent).
The number of homes sold was above 200 in the following zip codes: 20874 (357); 20878 (252); 20879 (221); and 20906 (302). Recording significant increases were zips 20862 (50 percent); 20868 (400 percent) and 20871 (73 percent). But the great majority of zip codes had double-digit decreases in sales volume. Those with losses grater than 30 percent were 20812, 20815, 20832, 20841, 20861 and 20896.
As for how long it took properties to find buyers, the number of days on the market ranged from a low of five in 20812, where only two homes went to settlement during the quarter, to 120, for a single sale in 20842. Significantly, average days on the market numbered 42 in 20815 for 80 homes sold, 37 in 20910 for 92 homes and 36 in 20905 for 49.
In a number of zip codes, sold prices met or slightly exceeded asking prices; those were 20812, 20839, 20851, 20874, 20878, 20882, 20902, 20903, 20910 and 20912. Zips that had sold prices more than two percentage points below the listing price were 20817, 20833, 20842, 20854, 20862 and 20868.
Sales slumped from 964 in the third quarter of 2005 to 704 with a drop in supply from 1,058 to 831 in the last quarter of the year. Although average days on the market rose from 16 to 24, prices went from $549,600 to $579,300.
Buyers paid the most on average in zip codes 22205 ($738,000); 22207 ($798,600); and 22213 ($818,600). The zips with the least expensive properties were 22204 ($450,700); 22206 ($426,100); and 22209 ($422,600). Only 22209 had a lower price than a year earlier, and that was just 1.24 percent on the sale of 48 units. On the sale of 45 homes, zip 22202 went up a mere 0.5 percent, and every other zip code posted double-digit increases from 12 percent (22205) to as much as 40 percent (22203).
At the same time, the number of homes sold fell by as little as 3.2 percent (22206) to as much as 42.2 percent (22209) with the exception of 22213, which jumped 27.3 percent (to 14). Properties stayed on the market between 18 days (22205) to 34 (22209).
On average no homes sold for less than 98.2 percent of its asking price, and none went as high as 100 percent.
According to Senior Research Forecast Lawrence Yun, local homes sales fell 7.4 percent during October, November and December. For the year, there was 4.9 percent growth in unit sales, to 199,768, and home prices rose by 14.8 percent versus 9.5 percent in 2004. A typical price was $345,400. “In 2006, the local job gains could total 80, 000,” Yun writes. “But home sales will likely fall by 3 percent due to higher mortgage rates. Similarly, the local region will see slower price growth – of about 7 percent. The outlook for 2006 looks brighter with home sales set to rise on the back of local job gains.”
Chief David Lereah, chief economist of the National Association of Realtors (NAR), predicts in the report that home sales and housing starts will drop by 5 percent and 8 percent, respectively, in the country. “I also expect home price appreciation to slow to 6 percent this year from a cyclical high. . . Notice, the housing sector is expected to experience a soft landing this year, rather than experience some ‘bursting’ of balloons.” Lereah adds that “there will be no sharp price drops or other negative events coming from the housing sector.”
It is the view of Ken Fears, NAR economist, that demand will shrink and homes will sit on the market longer because of declining affordability and increasing inventory. “Consequently, downward price pressure will develop, forcing sellers to make concessions [and] causing a decline in the ratio of sale price to list price in order to meet buyers’ ability to finance their purchase.”
Among the reasons Fears lists to explain an increase in concession is his speculation that realtors may be advising sellers to list their properties high “to boost up the sale price by listing well above comparable sales prices and accepting a slightly lower selling price that is still above the current comparables.” Second, he suggests that realtors may not have caught up with market changes. “Finally, if the market is truly oversaturated and has been stagnant for a protracted period, the only way to move homes may be to accept prices below recent realized sale prices,” Fears continues. “This last scenario is one in which there is a true concession.”
The economist goes on to note that days on the market went up by 4.7 days to an average of 40.5 from the fourth quarter of 2004 to that quarter last year. “Over this same time period, the area . . . has seen an increase in the concession of 0.5 percentage points.” (The concession ratio dropped from 99.1 percent, meaning that the sales price was that percent of the list price.)
“. . . It is too early to tell at which stage of the concession cycle we are in,” Fears equivocates. “Concession will likely rise as the supply of homes increase and days on the market expand; however, we haven’t seen a sharp increase in either as of yet. Concessions have likely increased slightly, but this is due to problems estimating initial prices by realtors. As realtors get used to a more stable market, their pricing will improve and concessions will shrink, but the long-term trend will be to an expansion of concession in order to move homes. Regardless, concessions and days on the market will rise, but this trend will only help to bring about a more equitable market, improving prospects for buyers. . .”
District of Columbia
Prices of sold properties climbed from $535,100 from the third quarter last year to $558,000 in the fourth as homes on the market dropped from 2,973 to 2,559 and properties that went to settlement fell from 2,443 to 2,063. At the same time, the average number of days on the market grew from 23 to 29.
The highest average price by far occurred in zip code 20007, which reached $1,203,100, up 34.2 percent on the sale of 147 homes. Way behind were prices that averaged in the $700,000s. In 20008, the average went up 13.6 percent to $765,300. In 20015, it was $775,300, off 3.5 percent. In 20016, prices slipped 5.3 percent to $761,600. And in 20037, a 37.6 percent increase attained an average of $781,100. The lowest prices were in zips 20019 ($235,500); 20032 ($208,800); and 20374 ($195,000).
Showing the biggest price gains were zips 20007 (34.2 percent); 20019 (34.9 percent) to $235,500; 20020 (35.9 percent) to $241,000; 20032 (31.8 percent) to $208,800; 20037 (37.6 percent) to $781,100; and 20307 (75.5 percent) to $549,800. The biggest declines were in 20006 (75.4 percent) to $203,300 and in 20004 (11.3 percent) to $505,800.
The zip codes with sales during the quarter of approximately 200 or more were 20002 (194); 20009 (278); and 20011 (212). Those zips with the biggest gains in sales were 20004 (240 percent) and 20307 (33.3 percent), but most posted losses in activity. The biggest decreases were in 20001 (40 percent); 20002 (29.2 percent); 20009 (20.3 percent); and 20016 (36.3 percent).
Average days on the market soared above 30 in the following zip codes: 20004, 20006, 20007, 20012, 20016, 20037 (77 days on the market) and 20307.
Although sold prices in the overwhelming majority of zip codes were within one or two percentage points of list prices (see Ken Fears above on concessions), notable exceptions occurred in 20006, which had an average of 95.1 percent of the asking price; 20007, (95.6 percent); 20024 (97.3 percent); and 20307 (93.7 percent).
Montgomery County
On sales that plunged from 4,534 in the third quarter of 2005 to 3,374 in the fourth quarter, the average price dropped from $531,300 to $515,400. Days on the market rose almost 50 percent from 19 to 28.
The highest average prices were in zip codes 20815 ($1,048,600); 20854 ($1,057,500); 20862 ($1,041,300); and 20862 ($1,041,300). The lowest ranged between $352,300 (20879) and $389,700 (20906).
Zips with the biggest price gains were 20868 (147.2 percent) and 20839 (148 percent), but they were on small bases below 5. Others with increases above 25 percent were 20852, 20862, 20872, 20877, 20895, and 20833. Declines in sold prices occurred in zips 20815 (36 percent); 20816 (23.3 percent); 20817 (30.6 percent); 20832 (35.9 percent; 20837 (12 percent); 20842 (32 percent) and 20896 (21.5 percent).
The number of homes sold was above 200 in the following zip codes: 20874 (357); 20878 (252); 20879 (221); and 20906 (302). Recording significant increases were zips 20862 (50 percent); 20868 (400 percent) and 20871 (73 percent). But the great majority of zip codes had double-digit decreases in sales volume. Those with losses grater than 30 percent were 20812, 20815, 20832, 20841, 20861 and 20896.
As for how long it took properties to find buyers, the number of days on the market ranged from a low of five in 20812, where only two homes went to settlement during the quarter, to 120, for a single sale in 20842. Significantly, average days on the market numbered 42 in 20815 for 80 homes sold, 37 in 20910 for 92 homes and 36 in 20905 for 49.
In a number of zip codes, sold prices met or slightly exceeded asking prices; those were 20812, 20839, 20851, 20874, 20878, 20882, 20902, 20903, 20910 and 20912. Zips that had sold prices more than two percentage points below the listing price were 20817, 20833, 20842, 20854, 20862 and 20868.
Arlington County
Sales slumped from 964 in the third quarter of 2005 to 704 with a drop in supply from 1,058 to 831 in the last quarter of the year. Although average days on the market rose from 16 to 24, prices went from $549,600 to $579,300.
Buyers paid the most on average in zip codes 22205 ($738,000); 22207 ($798,600); and 22213 ($818,600). The zips with the least expensive properties were 22204 ($450,700); 22206 ($426,100); and 22209 ($422,600). Only 22209 had a lower price than a year earlier, and that was just 1.24 percent on the sale of 48 units. On the sale of 45 homes, zip 22202 went up a mere 0.5 percent, and every other zip code posted double-digit increases from 12 percent (22205) to as much as 40 percent (22203).
At the same time, the number of homes sold fell by as little as 3.2 percent (22206) to as much as 42.2 percent (22209) with the exception of 22213, which jumped 27.3 percent (to 14). Properties stayed on the market between 18 days (22205) to 34 (22209).
On average no homes sold for less than 98.2 percent of its asking price, and none went as high as 100 percent.
posted by Service You Can Trust Team at
6:18 AM
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