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As virtual tours and social distancing became the norm, buyers, sellers and real estate investors regained confidence in the housing market. Extremely low mortgage rates brought new urgency for buyers and investors and pushed the summer housing market to new heights in all key metrics: median sales price; the number of homes sold and settled; and the number of pending sales, which are homes under contract that have yet to go to settlement.
The median sales price for the D.C. region in September was $512,000, an increase of 18.8 percent over September 2019 and a 10-year high for an annual price increase, according to Bright MLS. The number of closed sales (5,455) in September was 37.3 percent above July 2019. Condo and co-op sales hit a 10-year record (1,575) up 43.7 percent compared with last September. New pending sales (5,769) were up 17.4 percent in September compared with September 2019.
While looking at regional data provides a big picture view of the housing market, the numbers that matter to individuals depends on whether they are buyers, sellers or investors. The numbers that they can learn the most from are a little different this year, too, since 2020 has been an unusual year, to say the least. While general metro area numbers are broadly available, agents also have access to data about specific counties, school districts, cities and Zip codes that can be valuable to their clients.
Numbers to follow for buyers
Among the numbers that matter most to buyers, interest rates and price are of prime importance because those two figures affect what they can afford to purchase. But regional and individual neighborhood variations in price can matter more as a hyperlocal market takes off. For example, the median sales price in Fairfax County, Va., rose 18 percent in September 2020 to $588,720 compared with September 2019. But in Clifton, a community within Fairfax, prices rose 53 percent to a median of $737,500.
Other important numbers for buyers to watch include the number of new listings on the market, which give them new opportunities and decreases the likelihood of a bidding war with other buyers. Again, there are differences by location. For example, in Prince George’s County, Md., there were fewer new listings this September compared with September 2019. One example is Fort Washington, where there were 23 percent fewer new listings compared with last year. But overall, the number of new listings in the region was actually 9.4 percent higher in August 2020 compared with August 2019.
One measure buyers often review is days on market, which refers to how long it takes for a home to sell once it’s listed. But the pandemic may have made those numbers less important. In early spring, many sellers pulled their home off the market and then listed it again later. Some homes lingered on the market initially because buyers were wary of what would happen to the market, but homes are selling quickly in a median of seven days in September.
Numbers to follow for sellers
While sellers typically watch most of the same numbers as buyers, particularly for price and the number of homes on the market, they also probably want to know how many homes have sold in their neighborhood and about new listings that could be competition for their property.
For sellers, price information in their neighborhood for similar homes is crucial to help establish a listing price. Another important metric for them is the ratio of the original listing price to the actual sales price, which can help them gauge realistic prices.
Regionally, sellers have received an average of 100 percent of their list price, which is up from the historic norm of 97.2 percent. Some sellers are getting more than list price, but since 100 percent is the average, there are some who are getting less so sellers can be crazy with a high list price initially.
Numbers to follow for investors
Investors have a different perspective for the housing market, since they’re buying a home to keep and rent or to fix and flip. The location is less important for them personally, but they need to follow pricing and listing data to understand where they might find a property that would be affordable and yet appealing to renters or future buyers.
Investors can review days on market to see where sales are slower and compare pricing by Zip code or neighborhood. For investors who intend to keep their property, tracking rents by neighborhood and property type is also essential.
Jon Coile, chairman of Rockville-based multiple-listing service Bright MLS (formerly MRIS), writes occasional commentary on the Washington-area housing market.