Dear Friends and Neighbors,
Wow, Holiday Season 2017 is already here. Happy Holidays!! (or is it too soon for some of you?!) I always wondered when is it proper to start greeting people with “Happy Holidays”... But oh yes, we’re here to discuss real estate, so no matter where you fall on this most important quagmire, here are some of my thoughts about the real estate market in our area, served with interesting stats:
The DC area market is in its 16th straight month of declining inventory, which is good for sellers. August 2017 numbers showed inventory was down 4.4% compared to August 2016, and down 4.1% compared to July 2017. The median home price in the region in August rose to a decade record, as sales volume in July set a near all-time record. However, as inventory of homes continues to steadily decline month after month, the question on everyone’s mind is whether the trend will continue, pushing prices up, making home ownership less affordable even as interest rates remain low, hovering around 3.7%.
I do not anticipate a change in the coming months. Inventory will most likely remain low through the winter. Depending on the economic and political forecast in 2018, we may be seeing a change in the spring. One of the biggest issues at hand is lack of affordable homes for the downsizing population. Baby boomers who wish to remain in their town/city, find that downsizing does not apply to housing costs. Often times a reasonably sized condo will cost significantly more than the house being sold, and at best it’ll be a lateral move financially. This reality makes many would-be sellers delay the move or make adjustments for aging in place.
I’m leaving you with these questions for context as we zero in on the Bethesda-Chevy Chase market. The third quarter of 2017 was solid, in some aspects outperforming previous 3rd quarters. Overall, sellers who usually shy away from listing their homes during the summer months but who chose to list anyway, experienced positive results.
In the Single-Family Home (SFH) category, there were 226 contracts signed during Q3 ’17, with an average of 58 Days on Market (DOM), representing 19.5% faster turnover than Q3 ’16. The Sold to List Price Ratio improved slightly, averaging a 95.1% yield on the asking price (up 0.5% from 2016).
Townhomes and Condos
In the Townhome and Condo category (combined, all prices, all zips in Bethesda-Chevy Chase), there were 133 contracts signed, average price was $539,000, up 8.3% from same period in 2016, mostly due to new ultra-luxury inventory sales in downtown Bethesda. Interestingly, when we looked at the least and most expensive sales in the category, they were $130K and $2.35MM in Q3 ‘16 compared with $140K and $3.95MM in Q3 ‘17, respectively. The average DOM rose to 60 from 53 the previous year, mostly due to the injection of high-end, high-cost condos to the market.
From time to time I like taking a look at the market from different angles. Analyzing by zip code is helpful, but also carving the market by price category can be very telling, as you’ll see in the numbers below. Let’s take a few minutes to look at the current inventory and YTD sales of homes by price category in Bethesda-Chevy Chase.
As I write this piece, there 91 SF homes actively on the market in BCC, priced under $1MM. Since January 1, 2017, 412 SFH priced under $1MM were sold (or currently under contract). Averaging nearly 46 per month. This means that at this moment, the market is carrying a 2 month inventory. The average Days On Market (DOM) in the category is 27, which is less than half the Avg DOM for all price ranges. Sold to List Price Ratio in the category is 98.6%, outperforming the average for all price ranges by 3.5%!
$1,000,000 to $1,500,000
Next is the $1.0MM to $1.5MM. In this price category, there are 88 active homes for sale, out of which 10 are new spec homes, more than 11%! 262 homes have sold since the beginning of the year, 23 of them were spec homes (about 9%). At this rate, 29 homes sell every month, giving us over 3 months of inventory. The average DOM is 66, 14% higher than average for all price ranges. Sold to List Price Ratio is 96.2% - 1.1% better than the average for all price ranges.
$1,500,000 to $2,000,000
Moving up to $1.5MM to $2.0MM price category, there are 83 available homes, 25 of them are newly built spec homes, representing over 30% of the inventory! Year to date, 121 homes have sold, 42 of them were newly built homes (nearly 38%). The rate at which homes in this category sell suggest that we currently have a little over 6 months inventory. The average DOM is 100, nearly 50% higher than the average all-price category DOM. And lastly, the Sold to List Ratio is lower, as can be expected, at 94.6%.
$2,000,000 and Above
This brings us to the last category, homes priced over $2.0MM. There are 64 currently active homes, 18 of them are new construction spec homes (28%). YTD, 62 homes have sold in the category, 21 were new (approx 33%). These homes sell at an average rate of almost 7 per month, suggesting an existing inventory that will last over 9 months (if no additional homes were introduced). Average DOM is 113 – again, nearly 50% higher than average for all price ranges. Sold to List Price Ratio is 93.8%.
If you’re a seller, taking a few minutes to study your competition is a critical first step. Ask yourself what do buyers also look at when they’re searching and how does your home stack up to the competition? Staying objective is critical. What things can you do to improve your chances? How do you overcome potential objections? All are questions to be discussed with your Realtor and based on a comprehensive analysis, we can devise a plan that will yield the best results.
Not all homes are made the same; there is no one plan that fits all! If you’re thinking about selling, call me today for a free, no-obligation consultation. It will be my pleasure to offer my guidance and services and tailor a plan that fits you, your home, and your goals.