October 15th, 2009, posted by Brandon
September saw a leveling off of prices across the city for condos and coops and a 5.1% increase in contracts in comparison to Sept 2008. A 12.6% decrease in inventory means the competition for condos and coops is getting tighter across the city. Zip codes 20001-20016 are moving quickly and inventory that is well priced is commanding multiple offers and in some cases escalation. We are still challenged by lenders who aren’t getting documents to the table on time and a very large majority of contracts are FHA.
It is a tale of two cities in DC however, as many of the condos in 20017, 20018, 20019, 20020 zip codes continue to see a dramatic decrease in price of nearly 30% from this time last year and a decrease in contracts of 10%. There is almost no owner occupant market in those zip codes right now and so the majority of offers we see are from investors. Complicating matters are bankrupt condo associations with high foreclosure rates making it nearly impossible to finance many condos in those zip codes. This pushes us back into the cash market where investors are buying at $.50 on the dollar.
Inventory for DC houses is down 18.5% in comparison to this time last year, and contracts are up 20%. The average price is down nearly $100,000 and seems to have reached a level that is peaking the buyer’s interest. Again, it is a tale of two cities however as houses in 20017-20020 zip codes aren’t moving much at all. Prices continue to fall dramatically in those zip codes. If however the listing is in 20001-20016 then multiple offers will likely ensue.
DC houses: http://gcaar.com/uploadedFiles/PDF/ToolKit/Research/Home_Sales_Statistics/DC_Single_Family/dcsf0909.pdf
There is some indication that the fall market might be setting in. Traditionally activity begins to slow as we move into November and our “on the ground” reports indicate the last couple weeks are much slower than the previous several.
Keep an eye on interest rates as we move into the winter. If they remain around 5% the market will likely rebound into next year, even if the tax credit is not extended.
For more details or analysis in your area, call me, I’d be happy to look at your individual situation.