- - Thursday, June 28, 2012

There are two reasons this has been a much better year for area home sellers: more demand and less supply.

Demand is reflected by the number of buyers who signed contracts to buy homes in a given month. Supply is the number of unsold homes out there.

The quickest way to grasp how these two factors affect the Washington area housing market is to look at the bottom chart. There are lines across the top that show inventory each month - simply the number of unsold homes on the last day of each month.

The bottom lines show the total of existing-home sales for each month.

To assess the competitiveness of the housing market, you simply have to look at the distance between the inventory and sales lines on that chart. When they are far apart, as they were in 2009, then we are saddled with a lot more homes than buyers who want to purchase them. That causes the market to stagnate, keeps prices down and frustrates sellers.

When the lines get closer together, it is a sign that things are improving. You can see that the inventory is now much lower than it has been in recent years, and sales are up. As a result, sales chances have climbed quite high, buyers are competing with one another, and that is causing prices to go up.

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.

Although sales chances were 45 percent for the region as a whole, you can see in the top charts that chances vary quite widely among various jurisdictions.

And the time it takes to sell a home usually is related to those chances figures. In Northern Virginia, for example, sales chances are high and homes sell quickly. In some parts of Maryland, chances are lower and homes sell more slowly.

You also can see the dramatic difference in housing prices around the region. Median sales prices were a very affordable $170,000 in Prince George’s County in May, but across the Woodrow Wilson Bridge in Alexandria, they were less affordable at $500,000.

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