I’ve been writing about the sales climate in the Washington area for 11 years. Early on, I decided to evaluate the competitiveness of the real estate market by reporting “sales chances.”
This figure is the result of dividing monthly sales by the inventory of homes for sale. In 1992 and 1993, area sales chances were around 10 to 12 percent each month. It was a strong buyer’s market then, with plenty of inventory and slow sales.
The market continued to favor buyers in the following years. In 1998, sales chances rose to 17, which meant the market was slightly more competitive, but still a buyer’s market. Buyers had many homes to choose from, and it was the sellers who were willing to make concessions to the rare buyer who made an offer.
How quickly things change.
In years following 1998, sales chances rose into the 20s, then the 40s and 50s. In June of last year, sales chances reached a new record of 77 percent.
Compared to the early 1990s, the first few years of the 21st century saw many more buyers vying for only half the number of homes. This meant buyers were willing to make concessions to outbid hordes of competing buyers. As a result, prices shot up and inventory remained low despite a flood of homes being placed on the market.
So now we are in 2004, the year when things have become ridiculous. February sales chances were 80 percent, higher than the busiest month of last year.
This made me wonder what would happen in March, April and May — the three most-active months of the real estate calendar. How could sales chances climb higher than 80 percent?
Yet, they did. Washington area sales chances reached 112 percent in March.
As the charts accompanying this column show, individual counties reached much higher. Chances were 197 percent in Alexandria last month, a figure that seems utterly impossible.
Here’s how today’s outrageously competitive seller’s market makes sales-chance figures of 197 percent possible: Because inventory fluctuates daily, the inventory figures I report are based on the number of homes for sale on the last day of the month. They are a snapshot, really; a snapshot that tells buyers how many homes they can expect to find on the market on a given day. Home-sales figures, however, are cumulative for the month.
Because homes sold so quickly last month, particularly in Alexandria, Arlington, Montgomery and Prince George’s, sales chances exceeded 100 percent.
This was impossible 10 years ago, because homes sat on the market for months before being sold. Today, however, homes are selling in only a few days.
Because of this, my inventory snapshots taken on Feb. 29 and March 31 missed a large number of homes that went on the market and sold quickly. For example, a home placed on the market in Alexandria March 5 was probably sold by March 8. That adds one to my monthly sales figure, but zero to my inventory figure.
This incredible level of competition among buyers means that home prices will rise by double-digits in 2004, making area homes even more ridiculously expensive, yet easy to sell.
The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.
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