In the DC housing market, starter homes are moving faster
Competition for homes continues to be fierce in the DC area, but a close look at the numbers shows that one type of property is more in demand than others.
Competition for homes continues to be fierce in the Washington area, but a close look at the numbers shows that one type of property is more in demand than others.
“I would say the hottest market is for the entry-level single-family home,” said Eldad Moraru of Compass Realty.
From small single-family homes to townhouses, Moraru said these types of properties are coming off the market the fastest in the DC area. And they see the biggest bidding wars.
This is demonstrated by absorption rates, which Moraru says is a ratio that divides the number of homes for sale by the number of contracts for a home signed in a month.
“If you have a month and a half absorption rate, that just means if there is no new inventory, no new listings are posted, at the current rate, all of those listings would disappear in one month and a half”, Moraru mentioned.
By using absorption rates, Moraru said the housing market as a whole can be broken down into smaller, more specific segments and give you a clearer picture of the competition one can expect for a type of specific house in the area where you are looking to buy or sell a home. It can also help you make better decisions about what to offer in an offer for a property.
“What a buyer, seller, or buyer may experience in a market may not be true in a market you’re looking at,” Moraru said.
He said the current single-family home absorption rate is just under a month in DC and just over half a month for Fairfax County in Virginia and Montgomery County in Maryland.
As for condos, they sit a little longer with an absorption rate of 1.67 months in DC, and just under a month in Fairfax and Montgomery. Moraru believes the slowdown in the condo market is partly due to people moving into larger spaces during the pandemic.
With condos, Moraru said one with more bedrooms can move faster than one-bedroom units. Additionally, he said that the most sought after right now are condominiums with outdoor space.
“You might see one-bedroom condos on the market, whereas a three-bedroom single-family home ends up with 20 offers and disappears in a day,” Moraru said.
Moraru thinks that, down the road, condos will once again be a hot commodity.
“I don’t know if it’s three months or three years from now, but once people get over that psychologically, I think there will be a return to condos,” Moraru said.
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