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RBI: Fewer Listings Should Push Prices Higher

February 26, 2013  |  by Corey

RBI recently posted this interesting article about what the current inventory in DC and Baltimore means for the spring market. You can read the original blog post here

Only 4,000 homes were listed in the DC area in January. That is the best news sellers could ask for. As a result, we should see more competition among buyers this year. That is welcome, because buyer competition is the thing that pushes prices upward.

DC area listings fell 4 percent compared to January 2012—which doesn’t sound like a big deal. But compared to January 2008, listings were down 62 percent. The huge number of listings we saw several years ago is what caused the market to slow and pushed prices down. Every year since, we have been encouraged by the steady decrease in home listings and increasing sales activity.

Bottom line: Home prices are more likely to rise this year because the smaller inventory will force DC-area buyers to compete for the homes that are available.

Baltimore’s listings have also fallen since 2008. Last month’s listings were 36 percent lower than January 2008—not as sharp a drop as we saw in DC. Baltimore-area listings actually increased in January, rising 6 percent compared to January 2012.

Consider, also, that Baltimore-area contracts grew just 3 percent in January. That imbalance—with listings rising faster than sales—will not help Baltimore if it continues. It would only put a damper on buyer competition.

By contrast, the DC area enjoyed a 5 percent increase in contract activity in January. If contracts continue to rise while listings fall, DC-area buyers will face the stiffest spring competition since 2006.

Chris Sicks has reported on the Washington-Baltimore real estate market for 20 years.

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Posted in Blog, Market Statistics, RBI

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5 responses to “RBI: Fewer Listings Should Push Prices Higher”

  1. doug francis says:

    The most interesting green bar is the steady buyer increase since 2009. January 2013, holy smokes! These buyers are lucky that interest rates have remained consistently low.

    Home buyers who have lost out even with exceptional bids are going to be even more aggressive the next time around ~ hence, price inflation is the trend to watch in March, April and May settlements.

  2. Valerie says:

    I have never understood why Baltimore lags so far behind DC when some would argue that the mid-point between is a commuting area for both cities. Would love to see someone address this via a survey, article or just feedback.

  3. Mauricio says:

    Increase in prices is expected, but sequestration could have a negative impact on demand. That is my presumption, but I haven’t seen anyone write about the DC real estate market and the effect of sequestration. Thoughts anyone?

  4. Lisa says:

    We are seeing multiple offers and escalation clauses in all price points, and a lot of investors paying cash and not getting appraisals. Isn’t this what got us into trouble last time around?

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