Washington-area home prices rose this spring, a result of the most competitive year we’ve seen since 2005.
Homes that went to settlement in April cost more than they did a year ago in every area jurisdiction. To find a drop in prices, you have to look well outside the Capital Beltway, to Warren County in Virginia or Kent County in Maryland.
Prices were up 5 percent in Fairfax in April, 7 percent in Prince George’s, 13 percent in the District and 28 percent in Arlington.
And it’s about time. Today’s charts show median resale prices for jurisdictions in the Washington area for the past four years and four months.
You can see that prices in Virginia bottomed out late in 2008. They’ve slowly been climbing back out of that hole ever since.
Maryland saw more of a plateau than a bottoming out, but the activity among buyers there in 2012 clearly has boosted prices.
You see, it’s the level of buyer activity and the amount of unsold inventory that determine whether prices will rise. Together, these statistics provide what I call sales chances.
Sales chances are calculated by dividing a month’s sales figures by the inventory on the last day of the month, resulting in a percentage. A figure below 20 percent indicates a buyer’s market. Higher figures mean we’re in a balanced market or a seller’s market.
This spring, sales chances hit their highest level since 2005. Inventory is down dramatically in recent years, and buyers are buying.
That combination pushed sales chances well into seller’s-market territory: 65 percent in Fairfax, 49 percent in Prince George’s, 48 percent in the District and 64 percent in Arlington.
Sales chances probably will dip through the rest of the year, as buyer activity slows. And home prices typically rise more in the spring than any other part of the year.
Still, this is shaping up to be the most encouraging year for Washington-area real estate in a very long time.
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