What a difference a year makes. This time last year, home sellers were enjoying 20-plus percentage home appreciation.
Drop the zero in 20 and homeowners have a better idea of how their properties are doing now.
The average home sales price in May inched up to $553,618, just 2 percent more than last year’s average of $543,129, according to statistics from the Metropolitan Regional Information Systems (MRIS).
More and more homes continue to flood the market, which has taken some of the sizzle out of the market.
As a result, the market has taken on a good news/bad news logic. Since last year, inventory has nearly tripled, from 3,395 listings to 11,554, according to MRIS. Realtors agree it’s made selling much more competitive. That’s the bad news, for sellers.
Buyers get the good news. “The market may have shifted over to the buyer,” said Lawrence Yun, a senior economist with the National Association of Realtors. “Individual buyers are in far better position to negotiate prices down.”
As Jill Landsman puts it, buyers have time to “kick the tires.” Landsman, director of communications for Northern Virginia Association of Realtors, said buyers are in a wonderful position to hunt for good deals.
BUT DESPITE all the reasons buyers should be coming back, they haven’t to a degree that would take a chunk out of the burgeoning inventory.
Every month this year, sales have dropped compared to the previous year. In May, sales dropped 32 percent compared to last year, according to MRIS.
“But that is really a symptom of the fact that last year was such a frenzy,” said Landsman.
For Yun, slowing sales may mean that buyers have been held back because of mortgage rates that have crept upwards.
“Certainly, we didn’t foresee such a large growth in inventory,” said Yun.
Much of that growth has been in condos. More than four times the number of condos are on the market now than there were last year, according to MRIS. Three times as many single-family homes are on the market now than last year.
MANY BROKERS feel high expectations, which were fueled by the boom, have contributed to a rise in inventory.
“Some properties on the market are not in showing condition,” said Paul Valentino, vice president of Coldwell Banker. In years past, this may not have mattered as homes flew off the market because of a shortage in supply. “This year, condition matters,” said Valentino.
Landsman agrees. Even though Realtors have done a good job explaining the changing market conditions, sellers have been reluctant to relinquish lofty expectations on pricing. “A seller has to be very realistic to get their house to move,” said Landsman.
Valentino thinks speculators have driven the glut in the condo market. “They thought they could make a fast buck, but now they’re trying to get rid of [condos],” said Valentino, describing the popular trend to “flip” properties. “The flips are not there anymore.”
WHILE THE SLOWDOWN has been frustrating for many sellers, experts say homeownership continues to be a very good investment because of the strength of the regional economy.
“The local economy is superb,” said Yun, adding that job growth has remained strong.
In the past year, the region has seen the creation of nearly 73,000 jobs. “I think the decline in price growth will be very short term because there are so many buyers entering the market,” said Yun.
It’s important to note, said Valentino, that the market continues to be judged compared to the “rage and fury of last year.”
“A dip after [a period of] historical record does not mean catastrophe,” said Valentino.