“Spring is here, and the sap is running wild,” my high school English teacher used to say. Not just the sap in the trees, but that which is coursing through the veins of D.C.’s buyers and sellers.
Did you know there is a pent-up desire to buy in this economy? It used to be that the average American moved every 4.9 years. With the recession, that figure has almost doubled to 9 years. That means that not only are there a lot of buyers in this spring market, but a bunch of sellers with a pent-up desire to buy after first selling their existing homes.
The market continues to be strong for sales. The median sold home price in the Washington region for April 2015 was $524,900. That’s a 5% increase over April 2014, and a 5.5% year to date increase over this same period (January-April) of 2014. Closed sales for April are almost 15% higher than the 5-year average, while pending (under contract) sales are up 11.3%. Homes are going under contract in 8 days (that’s the median), the least amount of time in 10 years.
Part of what’s driving those figures is the relative lack of inventory. In April, there was only 1.8 months’ supply of homes for purchase, 33% below the 5-year average of 2.7 months. Months of supply is usually taken as an indicator of the market balance between sellers and buyers. In a balanced market, there is a six-months’ supply of homes for purchase. (That is the time it would take to sell off all the existing inventory if no new homes came on the market.) We haven’t seen six months of supply since June of 2009, though April’s 1.8 months of supply is higher than the low point for almost 10 years in January of 2015—1.49 months. With rapid sales and low inventory, it’s no wonder that active listings are so low: April’s 1,174 active listings is 22% lower than the five-year April average of 1,499.
So what’s a motivated seller to do if they want to stay in the Washington region, maybe to move up or maybe to downsize an empty nest? The conventional wisdom used to be to sell first, then buy later. But many potential sellers are reluctant to do this, given how fast their homes might sell, leaving them no place to move. So I turn that wisdom on its head: Buy first, sell later. It’s probably going to take a while to find a home that you can successfully compete to buy, but once you’ve got a contract to buy, it probably won’t take you too long to sell your existing place.
Ted Smith is a licensed Realtor with Real Living | at Home specializing in mid-city D.C. Reach him at TedSmithSellsDC@rlathome.com or follow him on Facebook, Youtube or @TedSmithSellsDC. You can also join him on monthly tours of mid-city neighborhood open houses, as well as monthly seminars geared toward first-time homebuyers. Sign up at meetup.com/DCMidCity1stTimeHomeBuyers/.