Charting the market: Resales up by 15%

Sales of existing homes were up 15 percent during the first four months of this year, giving renewed hope to homeowners who have seen their property values drop in recent years.

But sales weren’t the only thing that increased this year. Because the market has been more active than it was last year, the number of listings climbed 9 percent higher than in 2009.

That makes sense, given that 50 percent to 60 percent of home buyers are move-up buyers. Most need to sell a home at the same time as they buy their next one, so more sales mean more listings.

However, the question we have to ask about any rise in home listings is: Will they sell?

During the first four months of 2006 we saw 67,000 homes listed for sale. That was a new record, but one we weren’t excited about because homes were not selling fast enough to absorb that many listings.

In the years that followed, home shoppers had plenty of homes to choose from, and they found that sellers often were eager to negotiate. One by one, each of those transactions knocked down home prices, because buyers held the high ground almost every time. They negotiated home prices down a little more each month, simply because supply was so much greater than the demand.

That was the status quo from 2006 through 2008. Things got better in 2009 when sales shot up 21 percent and listings dropped by 18 percent.

The question I have about the rest of 2010 is whether sales will be strong enough to absorb the additional listings we’ve seen recently.

Low interest rates and a job market that is stronger than other metropolitan areas certainly will help to keep Washington-area buyers motivated, but many believe the federal tax credit for homebuyers that expired on April 30 simply moved some of the summer sales activity into the spring.

If they are right, we could see a greater-than-usual decrease in home sales this summer, with a corresponding increase in supply that will keep prices from recovering.

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The statistics in this story reflect a metro area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.