Charting the market: Buyers compete as sales rise

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By Chris Sicks

Can you name the three area jurisdictions with borders that all meet in Takoma Park? Although Montgomery County, Prince George's County and the District share miles of borders, they are very different real estate markets.

First what they have in common: Things are better than one year ago. Sales are up and inventory is down. Those are the key elements required for a recovery. When sales are rising and inventory is falling, buyers begin to compete more.

This change is what you see in the "sales chances" percentages on today's charts. 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.

While chances in September were still lower than the hyperactive market we experienced in 2004 and 2005, it was a great encouragement to see chances climb into the 20s.

You can see that in 2005, Prince George's County was one of the most competitive markets in the Washington area. Sales were high and inventory was very limited, all because prices were low enough to attract a lot of buyers. That pushed chances - and prices - very high.

This year, however, buyers seem to be bargain hunting in Virginia more than Maryland. Steep price declines in 2008 made counties like Prince William and Fairfax very attractive to homebuyers.

Because prices have also fallen sharply in Prince George's, we should see buyers responding before too long.

In Montgomery County, inventory has dropped dramatically, and that has pushed sales chances up and time-on-the-market stats down. Buyers in Montgomery County are competing especially for town homes, because there aren't a lot of them for sale.

When you compare the inventories of these three jurisdictions, you discover how different they are. The District had a lot of condos for sale in September, a large number of town homes and few detached homes. Montgomery County has more detached homes than anything else, followed by condos and a smaller number of town homes.

Prince George's County is overwhelmingly a detached-homes market with more than 4,000 for sale last month, and only 900 town homes and 800 condos. Also, sellers had trouble finding buyers for even that small number of condos.

Compare that to the District, where condos were not only the most numerous property type for sale in September, but they were also easier to sell than attached or detached homes because sales chances were highest for condos.

Contact Chris Sicks by e-mail (csicks@gmail.com).