July 26th, 2011 Categories: Market Updates
It’s hot outside, and the market’s hot – or not – depending on where you’re at in Montgomery County, Maryland. Here’s an overview of the current state of our market.
Overall Contract Activity
OK, let’s jump into the numbers. The first metric to review is the total number of contracts from March through June. The rush to get the 2010 tax credit distorted the timing of last year’s activity, but hopefully looking at a four month period will make this analysis meaningful. Overall during this period, contracts are down 5% this year indicating a softer market.
Contract Activity by Price Range
Here’s the overall comparison of contracts by price range. The entry level of the market is dominated by foreclosures and short sales. As prices have come down, buyers and investors are snapping them up. And, we continue to see strength at the top end of the market. Prices for upper bracket homes have come down quite a bit from the peak. Now, buyers are confident enough to take advantage of much better values.
In the middle of the market, we’re seeing lower activity in all price points. This is a conundrum since interest rates and unemployment are low, and prices have come down. Still, we just aren’t seeing a pickup in confidence – especially for mov- up buyers.
Activity by Area
Let’s look at the bad news first. Home values in these areas have clearly come down over the last year. Contract activity was much higher at lower prices. And for areas with the lowest priced homes – like Montgomery Village – available inventory has come way down to a strong seller’s market. I would expect to see higher prices in most of these areas in the coming months.
Several areas have had stable prices, but significantly lower contract volume. North Potomac, for example, had almost 20% fewer contracts, but the average price was up 4%. Lower contract activity could be a sign that prices need to come down to attract buyers. Or, given that inventory was super low in many areas last year, we could be seeing a return to a normal market with prices increasing. I’m paying special attention to these areas to see where prices are headed.
Some areas have had stable or increasing prices and higher contract activity – a clear sign of increasing home values. The Laytonsville area, for example, had 6% more contracts and prices were up over 9% which is great for them.
And lastly, Potomac and Chevy Chase had much lower contract activity, yet at much higher average prices. This is mainly attributed to more sales of upper bracket homes that I reviewed earlier. Take away contracts for homes priced $1.5M or more, and these areas go orange – stable or higher prices, but still lower contract activity.
While some areas and price ranges are rock solid, others are still adjusting. Once overall buyer confidence comes back – whenever that is – I think our market is really well-positioned to quickly take off. If you have thoughts on the market, please share them by making a comment below. Contact us anytime when you need help buying or selling in Montgomery County, MD.