How’s Our Market Performing? Our 2017 Mid-Year Update

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In this market outlook we review the most recent available data on the D.C. Metro area’s real estate market performance during the first half of 2017.

We focus on the following metrics:

• Sales
• Prices
• Inventory
• Property Type Performance
• Area Income & Employment

Unless otherwise cited, we refer to data compiled by Real Estate Business Intelligence.

We will present a summary of the key facts by analyzing this data, as well as provide a digest of what this data and the first half of 2017’s market conditions mean for you.

Sales

Total sales volume continues to increase year-over-year. May saw a year-over-year increase in sales volume of 9.7%. In June, we ended the first half of 2017 with over $3.4 billion in monthly sales volume—up 5.8% from 2016.

New contracts (6,668) hit their highest May levels since 2004. The volume of new contracts dropped in June (to 5,961), but they still remain above both the five year average (5,657) and the ten year average (5,081).

Recent closed sales have broken records as well. May saw 5,620 closed sales—the highest May level in over a decade, since 2005. Closed sales increased in June, up 9.3% month-over-month to 6,142, hitting a new high for the decade.

Properties are selling faster year-over-year as well. In June the median-days-on-market was only 12 days—two days faster than in June of last year.

Sales Summary: In the first half of 2017, we saw multiple decades-long sales records broken. May was an especially good month. While we saw a small dip in sales in June, overall the market continues to increasingly outperform all data we have on record.

Prices

In May, the median sales price in the D.C. Metro hit $460,000. This is the highest monthly median sales price on record. This data goes back 20 years. The previous monthly high occurred in June, 2016.

In June of this year, the median sales price dropped slightly to $455,000—the second-highest monthly price since 1997.

Median sales price in Washington D.C. ended June with a 5.4% ($30,000) year-over-year price increase. D.C. currently has the third-most-expensive median sales price in the Metro area (behind Falls Church City and Arlington). Yet D.C.’s median sales price increased at a faster year-over-year rate than either of those locales. (5.4% vs -1.6% and .2%)

Rental prices are seeing similar gains. The median rent for a one-bedroom has increased 2.57% month-over-month, and D.C. is now the fifth most expensive city for renting in the United States.

Price Summary: Housing prices are hitting the highest levels we have on record. With sales increasing and active inventory continuing to decline, we expect to see our market continue to break decades-long records.

Inventory

Overall inventory levels continue to drop. In June active listings were only 10,481—down 7.3% year-over-year. They are down 59.1% from the peak of 25,618 active June listings in 2008.

June 2017 was the 14th consecutive month that saw year-over-year inventory levels decline. (Despite the fact inventory increased slightly between May and June.)

Developers due appear to be attempting to meet this continued demand. We saw the highest June level of new listings since 2006. New listings in June were up 4% year-over-year. And June new listings are up a huge 39.6% over our 10-year low of 5,588 (from June 2012).

This increase has two components. The first, is a number of new developments that are starting to come online in the area. The second is a response to the metro area’s record prices—current homeowners appear to be selling their properties in greater numbers to take advantage of the premium they can now command.

Inventory Summary: We continue to see low inventory levels throughout the D.C. Metro area. While we’re starting to see a slight uptick in new listings on the market, the increased speed and price at which properties are selling indicates the new supply coming online is still not enough to meet demand.

Property Type Performance

The data segments sales into three property types—Townhouse, Condos, and Single-Family Detached Units.

Sales mostly year-over-year for all three property types. New contracts for single-family detached units did decrease 2.6%, but townhouses increased 3.3%, and condos increased .6%. For closed sales, we saw single family detached houses increase 1.3%, townhouses increase 4.8%, and condos increase 6.7%.

Prices increased year-over-year at the end of June for both townhouses (2.4%) and single-family detached units (3.6%). Condo prices dropped 1.3%.

Inventory levels dropped for all three property types, while new listings increased. Inventory declined by 5.7% for single-family detached units, 9.0% for townhouses, and 9.3% for condos. New listings increased by 1.5% for single-family detached units, for 7.0% townhouses, and for 6.0% condos.

Townhouses remain the fastest-selling property type, with a median-days-on-market of only 8 days. (Single-family detached units and condos both had a median DOM of 13.)

Property Type Performance Summary: Market performance was strong for all three property types. However, townhouses performed the most consistently strong, across all dimensions, while condos saw the most activity, but an overall reduction in prices.

2017 Mid-Year Summary: What This Data Means for Your

The D.C. Metro area continues to break pricing records, while experiencing severe reductions in inventory. While we’re beginning to see the first substantial crop of new properties hit the market to meet this demand—and more people continue to capitalize on increased prices to sell their properties at a premium—so far the market’s demand appears to be increasing at an even faster rate.

In short: the data indicate our market dynamics of under-supply, and over-demand, will not only continue, but they will only increase in the near future.

At Evergreen Private Finance, we work every day to help borrowers, brokers, and investors make the most of current market conditions. And the market data indicates we continue to operate within a particularly opportune moment in D.C.’s real estate market.

Contact us today to discuss how we can all make the most of these opportunities. Call us at (202) 713-9072, or email us at [email protected], to discuss how we can work together to create a diverse, livable city for all our residents.