Eager home buyers pushed sales prices up this spring, proving once again that area prices rise more in the spring than any other season.
If you study the fever charts below for a moment, you’ll see something remarkable. Look at Fairfax County in March 2011. Then follow that line up to July. Do you see how dramatically prices rose in those four months? Now, follow Fairfax County from July 2011 over to May 2012. Ten months later, the median price was virtually the same.
In 2012 and 2013 this same cycle appeared again. I’ve actually been watching this happen for years. In nearly every Washington-area housing market, the median sale price of existing homes jumps during a few months each spring. And, for the rest of the year, they never again hit that spring-time high.
Why does this happen? Because eager buyers push one another to pay more and more for homes each spring. Then, each time a home sells for a higher price, it sets a new benchmark for that neighborhood. Every seller thereafter bases his asking price on the new benchmark.
As buyers notice how competitive the spring is, many offer more than the asking price. Particularly in popular neighborhoods like Capitol Hill, Bethesda and almost all of Arlington, buyers typically had to offer more than the asking price this spring if they wanted to win the home of their choice. And that is what pushes prices up, quickly.
Does this mean that home values (not prices) rise and fall during the year? I don’t think so. I believe this data tells us that, during a seller’s market, the highest sales price for a home may be obtained in the spring, when buyers bid up home prices to compete with one another.
However, if a home is sold for $500,000 in March, I don’t believe it would be resold for less than $500,000 in August. I believe this home would retain its value, but might take longer to sell. In other words, this data tells us about overall price trends, not about the value of individual homes.
—Chris Sicks has reported on the Washington-Baltimore real estate market for 20 years. Contact him at firstname.lastname@example.org