As you likely have heard, home sales have been increasing in the Washington region. So have prices, which is a result of improving sales and another piece of data: home listings. The number of homes listed with area Realtors is lower than it has been in more than a decade.
When the boom began to bust in the fall of 2005, I could see it happening because the number of homes listed with area Realtors soared. Tons of homeowners and investors tried to sell while prices were high.
Eventually, listings dropped as people realized home prices were being pushed down by the oversupply. People didn’t try to sell homes that were worth less than they owed the bank. Those who listed their homes anyway caused the unsold inventory to swell with short sales that rarely were sold.
To help you see what happened with home listings in recent years, today’s bar charts reach back to 2006, showing the total number of homes listed from January through August in 2006, 2008, 2010 and 2012.
In several jurisdictions we are seeing about half as many homes on the market as we did in 2006. That’s a dramatic change.
The biggest drop has been in Prince William County, Va., where 14,074 homes were listed from January through August in 2006. This year, only 5,837 were listed during those months.
Now, with that in mind, I’ll tell you about sales: There were 5,100 sales from January through August 2006 in Prince William, compared to 5,547 this year. Not a huge increase.
But, because this year’s sales happened in a county with a dramatically lower inventory of unsold homes, those 5,547 buyers had to compete with one another in a way they never did in 2006.
Let me connect those two pieces of data — listings and sales — to one that you may care even more about: home prices. It was the lack of buyer competition in Prince William from 2006 through 2008 that caused prices to plummet.
The drop in home values caused home listings to drop, which, in turn, increased competition among buyers because there weren’t as many homes available. Then, that competition is what caused the median sales price in Prince William to rise from $220,000 in August 2008 to $275,500 this August.
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By Douglas Holtz-Eakin
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