- The Washington Times - Wednesday, June 21, 2006

Mind the gap, because it got a lot wider in May. I’m talking about the gap between the number of homes for sale in the Washington metropolitan region and the number of homes that actually sell.

Looking at the fever chart at lower left, you can understand the state of our region’s housing market in just a few seconds.

Take note of the spring of 2005. Do you see how the number of sales each month and the inventory of homes were almost even? This caused last spring’s housing market to be extremely fast-paced, with buyers competing fiercely for the limited supply of homes for sale.

Now, take a look at the lines representing this year’s market. Instead of running close to one another, there is a huge gap between sales and inventory.

On a given day in May, buyers had about 45,000 homes to choose from in the metropolitan area. That is the largest inventory we’ve ever seen.

We should note, however, that in May 1992 there were 40,000 homes on the market. When you consider population growth during the past 14 years, last month’s inventory seems a little less surprising.

Despite the abundant selection enjoyed by buyers last month, they only purchased 9,280 homes — a drop of 33 percent compared to last May.

The drop in sales and the explosion of inventory caused not only the gap on my chart to expand, but days on the market, as well. All over the region, homes are staying on the market two or three times as long as they did last year.

In Alexandria, homes sold in May were on the market for an average of 59 days, compared to only 12 days in May 2005.

Other cities in the area fared better. Homes sold in the District in May were on the market for 50 days, up from 36 days last year.

Interestingly, up in Baltimore, time on the market is actually down this year. Although homes do take about two months to sell in Baltimore, this affordably priced city is the only jurisdiction in the entire region that has seen time on the market figures drop this year.

Sales chances for the region were only 21 percent in May, the lowest in eight years.

Sales chances are my way of measuring the level of competition in the real estate market.

Dividing sales figures for the month by the inventory on the last day of the month results 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.

Contact Chris Sicks by e-mail ([email protected]gmail.com).

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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