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Posted by: Kristin Cummins
As we have covered real estate data for neighborhoods throughout Washington, DC and Northern Virginia lately, things have been lining up pretty well. If inventory has been down, prices have generally been steady or rising. However, in most cases, along with a reduced inventory there has been a consistent, or even reduced averaged days on market for that time frame. We are talking about simple supply and demand. Supply was dropping and demand was staying the same or increasing, so prices were on the rise.
In steps Capitol Hill and the somewhat inconsistent data that comes with it, which I will unpack below. Please note; the term “Capitol Hill” is used in quite liberal terms here. The data below is for the 20002 and 20003 zip codes:
Looking at this chart one would think that Capitol Hill has landed squarely in seller’s market territory. Over the last two years inventory has steadily declined. If we were to pull in the data all the way back to 2007 we would see that the inventory of available homes in Capitol Hill is currently at it’s lowest level in 5 years.
So if inventory is steadily decreasing, prices should be steadily increasing, right? Not necessarily. We can see that average home prices in Capitol Hill have fluctuated during this time. Often this has more to do with what homes have sold versus any fluctuation in actual value for individual properties. ie, in the peak months we would likely find that more renovated row homes sold during that time, some of which were likely 3 bedrooms rather than the very common (for Capitol Hill) 2 bedroom variety.
The answer to why prices have not gone up in reaction to low inventory lies in this chart, at least at some level. While inventory plummeted, days on market actually took a sharp turn upwards. In other words demand has reduced as much as, or more than the inventory of available homes.
Summary
One very important thing to understand is that this data covers 20002 and 20003, and though these include areas around Capitol Hill, they cover broad range of neighborhoods, including many that are still considered “transitioning”. Though the market has been performing relatively well, buyers are still not willing to push though any sense that they may be overpaying. In my quick glance through the inventory in 20002 and 20003 it seems to me that the homes that are updated and priced well are still selling quickly. However, it seems that there may be a steady stream of homes that are pushing the boundaries of what buyers are willing to consider when it comes to price.
In my opinion this pricing discrepancy is likely the greatest cause of the increased time on market. Ironically, this attempt to push the market is possibly having the reverse effect, as the data shows that prices have actually dipped of late.
That is just a partial hypothesis. There is always more than one or two dynamics at play, I just happen to think that sellers asking a bit too much too soon is one of the factors playing a role in this set of data.
View/Download a detailed report for 20002:
View/Download a detailed report for 20003:
About the author
Kristin, the founder of The Ramsbury Group, has been representing clients and redeveloping properties in the Washington DC area for over a decade. She has represented residential and commercial clients in transactions ranging from $200,000 to $4 million in value as well as commercial leases up to 15,000sf.
