Photo: Valerie Hinojosa/Flickr
Home prices in the DC metro area reached an all time high last month. But while the DC’s market remains good for sellers, homebuyers struggled with affordability amid a dwindling selection of homes for sale, according to a new report by MRIS released yesterday.
The median price of a home in the DC metro area climbed 7 percent year-over-year to $460,000 in May, surpassing the previous high of $446,000 recorded in June 2016. This was the highest median price of any month recorded, says MRIS, a provider of real estate information technology and one of the nation’s leading multiple listing services.
Sellers received, on average, 98.8 percent of the original listing price in May — the highest May level in the last 10 years. May’s level was up from 98.3 percent last year, and slightly above the 98.7 percent recorded the previous month.
Homebuyers had nearly 11 percent fewer homes to choose from in May compared to last year. This marked the thirteenth month in a row inventory levels declined year-over-year. In fact, last month inventory was at it lowest May level since 20013, says MRIS.
There were 9,865 active listings in May, which was up 3.3 percent from the previous month despite the annual decline.
“There’s huge demand, but active listings have been declining by near double-digits. We’re running out of houses,” Elliot Eisenberg, the Chief Economist of GraphsandLaughs and author of the report, tells BuzzBuzzNews. GraphsandLaughs is a firm specializing in economic consulting and data analysis.
Part of what is driving the unprecedented level of demand is the entrance of aging Millennials into the housing market. They’re getting older and are seemingly ready to settle down, Eisenberg says.
Also, financing is become easier again, though not quite what as easy as it was in the years preceding the Great Recession a decade ago.
“Millennials can refinance their student loans into their house, buy a home with little to no money down,” Eisenberg explains. And this is fueling demand for housing that just isn’t available.
“Builders just can’t afford to build starter homes here. It’s too expensive with all the restrictions and regulations on the state and local levels. So again, they build more expensive condos instead of the starter homes buyers are looking for,” Eisenberg tells BuzzBuzzNews.
Another factor that could be driving up demand Eisenberg says is the re-entry into the housing market by many homeowners who defaulted on their mortgages during the financial crisis a decade ago.
“Eventually, something will have to give. Supply and demand will come into balance through a reduction in demand, if no one can afford the housing,” Eisenberg says of the inventory crisis.
Still, despite record-setting prices, homes sold faster in May than the previous year. Homes were on the market an average of 10 days last month, down from 13 last year.
Sales volume in the DC metro area rose nearly 10 percent from last year to over $3.1 billion in May. Closed sales were up 3.5 percent from last year in May, and set a new May high for the decade.
Click here to read the entire report.