- - Thursday, March 29, 2012

So far, this has been the best year for the Washington-area real estate market since 2005.

Sellers, especially in Virginia, have enjoyed an excellent combination of strong sales and low inventory. When a market has both of those elements, home sales move along at a good pace and prices can rise.

Last month’s sales were up 10 percent over February 2011, yet the inventory of unsold homes was down 23 percent. Just 18,487 existing homes were available to buyers on the last day of February. Compare that to almost 44,000 in 2008.

It was that huge backlog of unsold homes that dragged down area home prices. One thing that helped reduce the backlog was the federal homebuyer tax credits of 2009 and 2010.

But even those generous incentives didn’t produce the kind of market we see today. Early in 2010, when buyers were anxious to get a home before the tax credits expired, home sales were strong.

The problem was the inventory. Can you see on the bottom chart how much higher the inventory was in 2010? Sales chances were just 23 percent in February 2010, compared to 40 percent last month.

Sales chances are something I calculate 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.

Sales chances this February reached really impressive levels. Prince George’s County hit 41 percent, and Montgomery was at 43 percent. Those are seller’s-market levels.

Over in Virginia, Arlington and Alexandria also were in the 40s, but Prince William County hit 58 percent, and Fairfax posted an incredible 61 percent sales chance figure!

Another encouraging data point is the number of homes that have been listed with area Realtors this year. Listings are at almost exactly the same level as they were last year. That means the supply of homes to be sold is steady, while sales are rising. This could lead to a strong seller’s market in the coming months.

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