Housing inventory is UP!

Posted by Abbott Klar Real Estate on Monday, November 11th, 2013 at 12:29pm

According to numbers released by RBI this morning  Active listings of homes for sale increased by 5.6% for the Washington DC metro Area.

RBI key Housing Trend Metrics (Washington, DC Metro Area) October 2013

 The increase was much more dramatic for Washington DC with an increase of 33.5% year over year. 
Here is the chart of active, new and pending listings for the last year in Washington DC.


If you take a few minutes to study the graph you can see (red line)that there was a 33.5% increase in new listings compared to October of last yeasr.  But even more interesting is the fact that the total number of Active listings in October 2013 was DOWN by 4.2%. This means that there are enough buyers out there today to absorb all the additional inventory.  Of course, we should not get overly excited here: yes, inventory is up, but it is still way down from 5 years ago.  There are still a lot of buyers in this market who would love to take advantage of these (still) low interest rates to buy a home who cannot find a place that works for them. 
Here is the chart of inventory of Active and Sold listings over the last 5 years:
5 year market activity from RBi, Washington DC
Looking at the above graph of Washington DC market activity of Active and sold homes for sale, it is clear that the inventory of homes for sale in the Washington DC market is still very very low compared to 5 years ago.  This might be viewed as a sign of a healthy market, as demand for housing by new buyers is soaking up most of the inventory.  Compare that to 5 years ago when there were nearly 4 homes on the market for every house that sold.  Clearly the Washignton DC market is very much in the middle of a sellers market right now.  So if you are a homeowner thinking of selling your home, now is a great time to sell your house.  Lots of buyers, low inventory, and (historically) low interest rates add up to a great time to sell your house.  Don't wait till Spring to sell your house.  Everyone else is doing that!  So, it is logical to assume that inventory in the Spring will be higher than right now.  As a seller, you want less competition for your house, not more..

If you are a buyer?  This is a hard market to buy a house in.   You need to be fully prepared by being pre-approved for a loan, know exactly what you want and what you need and what you will accept in a home, and be ready to act fast.   Large downpayments, quality pre-approvals and ability to minimize contingencies will help you beat out the competition.  Consider doing a pre-inspection before you submit the offer so that you can submit a cleaner offer on the house.  And, hire a professional local buyer agent.  Buyer agents can guide you through the process and help make your offer be the winning one.  And remember, in many cases, buyer agents do not cost you as the seller pays their comission. (some have small admin fees)

Also, buyers should consider that an article in the WSJ, the  National Association of Realtors is predicting that interest rates are heading up in 2014 to 5.4%. The NAR is also predicting that home prices will rise by 6% next year.  Today interest rates on a 30 year fixed rate loan with great credit and 20% down payment is around 4.2% (changes daily- talk to your lender). An increase in the interest rates to 5.4% will cost the average homebuyer (buying a $500K home) nearly $300 more per month and about $100,000 more in interest payments over the life of the loan.   Waiting to buy will cost you real money.  Also buyers should consider this report from Trulia which states that the real estate market is on its way back up and very far from bubble territory.  Clearly, NOW IS THE TIME TO BUY!!!

Happy house hunting :)

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