D.C. Market Update - Prices slip along with sales activity

Condos and co-ops

Issuance of April statistics was delayed last month, perhaps because the technology understood that they might depress sellers. For owners of condos and co-ops, the news could not be thrilling. The supply of apartments added to the market swelled by 31.6 percent over the previous April, sales fell by 18.4 percent, and the total number of listings still in search of buyers rose by 283.8 percent. For the year to date, the sales slump amounted to 12.3 percent.

With regard to new listings, they increased by at least double-digit percentages at all price levels but the lowest (up to $150,000), the highest (over $1.5 million) and one in between, ($200,000-300,000), which fell 22.3 percent to 94. By far the biggest concentration of listings was between $300,000 and $500,000, which accounted for 333 of the 704 that went on the market during April. In April one year ago, that middle category had 229 apartments added to the market. As for active listings at the end of the month, the steep growth that occurred between December and March shows signs of leveling off, though the total of 1,443 properties still available was higher than in the previous 12 months. Still, increases in the triple digits as high as 446 percent ($200,000-300,000), 411 percent ($300,000-400,000), 317.2 percent ($400,000-500,000), 297.9 percent ($500,000-600,000) and 394.4 percent ($600,000-700,000) speak to a cooler market.

The declines in sales to 354 from 434 in the prior April evidenced weakness between $200,000 and $700,000 but gains at $150,000-200,000 (up 19.4 percent to 37 units put under contract) and between $700,000 and $1 million; however, the higher end sales amounted to only 22 condos and co-ops. Although there were losses above $1 million, the bases at each price point were just a handful. Sales volume was lower than it was in March but higher than it has been since October.

The rate of absorption was a pallid 19.7 percent, falling below 20 percent for the first time in recent memory. In March it was 23.2 percent of the apartments available for sale. In February, it was 21.4 percent.

The big news for sellers and buyers alike is prices, which now have fallen from an average of $426,576 last year to $414,053. The median also has slackened, from $375,000 in 2006 to $365,950.

Single-family homes

For sellers of single-family homes, the good news is that April saw an increase of a mere 1.2 percent in new listings compared with the previous April. Underneath that average, however, lay growth at all levels above $500,000 (for instance, 118.8 percent between $1 million and 1.25 million) with the exception of $700,000-800,000, which decreased by 22.1 percent to 60. Offsetting the growth were declines across the board below $500,000 – for example, 14.2 percent, to 97, for homes offered at $300,000-400,000.

Having risen steadily since December, the number of active listings at the end of month rose to barely the 12-month peak reached in March. Active listings totaled 1,221, or 121.6 percent more than in the previous April. The biggest price level was 235 homes (up 121.7 percent) still seeking buyers. Except for double-digit increases between $1 million and $1.25 million and over $1.5 million, every category above $200,000 registered triple-digit gains. Below $200,000, the supply dropped from 23 at the end of April 2005 to 8 this year.

In all, 421 homes found buyers versus 523 a year earlier, off 19.5 percent. With 25 ratified contracts, sales volume above $1.5 million was even with the prior April. It was up 80 percent between $1.25 million and $1.5 million, to 18, and 27.3 percent between $1 million and $1.25 million. Yet it sank in the double digits at every other price level with the exception of $300,000-400,000, where the decline was 4.8 percent. Year-to-date sales activity slipped by 16.2 percent to 1,492 homes that went to contract as the result of decreases at every price point but $500,000-600,000, which went up 2.5 percent, to 164.

The market absorbed 25.6 of the available properties, unremarkably different from 26.8 percent in March and 25.8 percent in February.

But prices have dropped from $628,179 last year to an average of $598,974. In 2006, the median was $489,000; now it is at $465,000.

What it all means

The vaunted “soft landing” is no longer approaching; it has arrived. With huge inventory gains for apartments, condos and co-ops will continue to move more slowly, far more slowly, than they did last year. Yet the relatively few in the higher prices ranges can be expected to find buyers with some success. For single-family homes, the highest levels can be expected to do better than those below $900,000 or $1 million. But nothing priced according to last year’s market will go to contract without a difficult negotiation. As sellers’ expectations begin to fall in line with buyers’ realities, a balanced market that favors neither buyer nor seller is starting to seem feasible. Reaching that point will take months.