DC Market Update: May 2018

Record High: May home prices hit highest monthly level on record for the DC area

As summer heats up, so are home sales and prices. In over a decade, we have never seen home prices this high for May (which is also a hot selling month regardless of economic factors). What does this mean? What happens next?

One thing I’ve learned after a lifetime of buying and selling real estate right here in DC is this: there is no such thing as “normal market conditions.” In order to make sense of the many factors influencing home prices, it’s important to look at how the prices, inventory, and days-on-market are trending over time.

In May, according to Bright MLS housing data compiled by MarketStats, the DC Metro median sales price hit $465,000. This is a 1.1% increase over May 2017 - the highest monthly level in over ten years.  This marks a 3.3% increase over April, a full $15,000 jump, however we must bear in mind that May is the peak of the selling season every year.

Many people are wondering if these continuously climbing prices are indicative of a bubble; even analysts are saying scary things like “what comes up must go down!” While I agree with that statement when it comes to gravity, the surrounding economic factors simply don’t support any theories of a looming recession.

If you take a closer look at the chart above, you will see that the percentage increases have been getting smaller and smaller. It looks like we hit a high point in 2016 and home prices here in DC have been ever so slightly increasing since. Looking back to the last few recessions, prices were growing exponentially and then fell; we did not see today’s pattern. We may be beginning to level off – but there are no signs that housing demand will suddenly plummet.

With May being a particularly frantic time for buyers, we are seeing homes sell quite fast. The average “days on the market” indicator in May was nine days. Nine days! Homes should take a few months to sell. Nine days on the market – on average – means that many homes are probably selling before they even hit the market. Listing agents (myself included) are no doubt setting up pre-sale previews and presenting multiple offers to their clients the same day the listing goes live. 

This, truly, is unprecedented – and I doubt it will last much longer. After the frenzy of the summer selling season passes, we will likely see homes percolate on the market a little longer. Rising interest rates will help reduce some of the demand we are experiencing for the limited amount of inventory available.

In short, I advise any homeowner considering selling to do so without hesitation. While I do not foresee a steep price decline in the near future, I do think demand will slow down and prices will continue to level off. I also strongly encourage sellers to spend time researching their market or to work with an agent who is well versed in the area’s current trends. “Pinpoint pricing” is the key to taking full advantage of this seller’s market.

For those considering buying a home in DC in today’s market, it is absolutely essential to have pre-market access to listings. Choosing an agent with a lot of experience and a lot of good relationships with other agents will give buyers the best chance of landing a home at a fair price. 

Have a great summer, DC! And as always, I am here to answer any questions you have about your home or the housing market here in the beautiful DC area.