Housing Demand in Area Outpacing Supply
The inventory of homes listed for sale in the Washington metro area dropped to just 5.1 months' worth in June, according to a report from Delta Associates, a real estate consulting firm, and Metropolitan Regional Information Systems Inc., the local multiple listings service. That's an important milestone for the local housing market. Analysts usually cite a six-month supply as normal for a balanced market. Five months' supply takes us out of a buyer's market and toward one that favors sellers.
"The metro-wide ratio of 5.1 months' worth of listings is below the normal, healthy standard of six months, signaling that demand is beginning to outpace supply," the report says.
Before you get too excited, keep in mind that prices in the April-June quarter were still 13.2 percent below what they were last year. "In recent years, Washington-area average prices tend to rise when the ratio of inventory to sales is below six months' worth," the report says. "Lender constraints may hinder a quick rise in prices, but the gap between supply and demand is closing in the Washington area." Sellers are continuing to offer subsidies to make their homes move, but those incentives are shrinking, and attractively priced homes are drawing multiple offers.
They said they expect to see price gains, compared with last year, by late this year or early 2010, especially in the District, Arlington and Alexandria. It could take until late 2010 or early 2011 for price gains to hit the outer suburbs of Loudoun, Prince William and Frederick counties.
How does that mesh with what you're seeing in your neighborhoods?
August 5, 2009; 6:00 AM ET
Categories: Statistics , The economy , The market
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