- - Thursday, June 23, 2011

May was a good month to be selling a home in the Washington area. Not quite as good as March, but a good month nonetheless.

The bottom chart, which provides figures for sales and inventory, tells it all. Sales are the number of ratified contracts signed in a particular month. Inventory is the number of unsold homes in the database of Metropolitan Regional Information Systems on the last day of the month.

First, look at the lines for 2008. That year, sales were low and the inventory was sky-high. Homes languished on the market and prices fell hard. It was a buyer’s market, with multiple offers a rarity and lots of frustrated sellers.

Look next at 2009. You can see how the inventory fell steadily throughout 2009, which made buyers compete with one another a little more.

Now look at this year’s lines. You can see how much closer the two lines are to one another than in 2009 or 2008. The closer those lines get, the easier it is to sell a home. That’s because higher sales and lower inventory force buyers to compete with each other.

That’s a seller’s market, and at least half of the Washington region is in one right now. With a sales chances figure of 32 percent, May was the second-most-competitive month we’ve seen since last spring.

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 a seller’s market.

You can see in the other chart that chances are higher in Virginia than in Maryland. As a result, homes sell more quickly in Virginia, but Maryland sales are catching up. Sales during the first five months of the year are up 17 percent in Maryland, and up just 8 percent in Virginia.

Because the seller’s market began earlier in Virginia and the District, that’s where most of the price increases are happening. Prices in May were up 10 percent in Arlington and 12 percent in the District.

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