With the government shutdown in the rearview mirror, we were curious how the market fared in February. And it probably won’t surprise you that, since all real estate is local, there were some considerable differences.
Just one example: in Kalorama and Georgetown, the market was a little softer than this same time last year. There was a little more inventory and little less contract activity, but absorption rates remained squarely in the “balanced market” stage. In fact, the inventory of available homes on the market crept up all over DC and suburban Maryland while contract activity was pretty stable.
On the other side of the river in Northern Virginia, we saw a very different dynamic. Absorption rates in most areas rose compared to last February. At a quick glance, that would seem to indicate an improving market. But that’s not the whole story. While inventory was rising in DC and Maryland, it has actually been falling in the Virginia suburbs so there were simply fewer homes for the market to “absorb.” So absorption rates rose despite fairly flat contract activity.
The takeaway is simply this: every market is different and if you’d like to know more about how things are in your neighborhood, we encourage you to call your favorite McEnearney Associate and we’ll give you an in-depth analysis.
The partial government shutdown that started right around Christmas and extended through almost all of January undoubtedly put a squeeze on the metro DC real estate market.
We took a look at absorption rates – the pace at which the market is absorbing” the available inventory – in January and compared those to rate the previous January, and there is an inescapable conclusion: the market was slower.
Bubbles are great to have in champagne, baths, and a host of other things, but they are not good for the real estate market.
A real estate bubble generally is caused by unjustified speculation in the housing market that leads to a rapid and unsustainable increase in prices. When it bursts, prices decline quickly – often to levels lower than when the run up in prices began. The whole country experienced a painful bursting bubble almost a decade ago, and its impact was felt far beyond the real estate market.
There is no doubt that home prices have risen significantly in the metro area during the past several years and affordability, especially for first-time homebuyers, is a real concern. But are we in a bubble? The short answer is no.