housing statistics Prices ended 2013 on a very high note. The average single-family home cost $711,905 with a median price of $599,900 and logged appreciation rates of 8.6% and 13.2%, respectively. So far, 2014 is moving at a much slower pace. Through February, the average price of $712, 966 was up way less than 1% and the $559,700 median dropped by almost 7%. Obviously, there is lots of room for improvement this spring.
($188,900) rose over 10% and the average ($237,200) moved up 8.5% from a year ago. In the existing condo/coop market, sales units (570,000 saar) were unchanged from December, but only 1.8% above January 2013. Nevertheless, the national condo/coop median price came in at $188,700 – bouncing up 13% from a year before. And, the average price ($239,300) jumped 11%.
Economic Growth and Jobs
Condos and coops experienced very good appreciation rates in 2013. Then, prices averaged $454,600, the median was $408,500 and they were up 5.9% and 7.5% from their respective 2012 figures. So far, this year has started on the soft side. Through February, while the average price of $461,312 was up 1.5%, the $390,000 median slipped 4.5% from 2013. Again, there is plenty time for improvement with spring almost upon us.
February Condominiums and Cooperatives
The good news is that the DC condominium and cooperative market is doing much better than the single-family market. Yearto-date February settlements (462) rose almost 3% and contracts (571) were up 2% from a year ago. Moreover, monthly settlements of 249 properties jumped over 7% from a year before and February contracts (307) bumped 6% from a year before.
National Resale Market
However, the supply of listings is thin. Since September, condo/ coop inventory has been declining, and it is down for the first two months of this year as well. Nevertheless, through February, 524 total actives actually were 5% above those of the previous February. And, the 361 new listings for February were above the level of a year ago, but by less than 1%. At the February contracts pace, there was only a 1.7-month supply of properties.
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Capital Area REALTOR® • Mar/Apr 2014
Nationwide, total existing home resales in January (most recent available) totaled 4.62 million units at a seasonally adjusted and annualized rate (saar). The monthly figure slipped 5% below December and was also 5% below the rate for January 2013. The January median price of $188,900 jumped almost 11% from a year before with the $237,500 average rising almost 9%. At the end of January, there was a 1.9-million unit inventory (saar), which represented about a 5-month supply of homes. That inventory was up 2.2% from December, and over 7% above the January 2013 stock. For the single-family resales market, January sales (4.05 million, saar) declined 5.8% from December and were 6% below the pace of January 2013. However, the single-family median price
The Bureau of Economic Analysis’ second estimate of fourth quarter real GDP growth (the economic growth rate less the inflation rate) came in at a weak 2.4%. Many forecasters had estimated that the fourth quarter rate would be about 4%. Overall, 2013 had a real growth rate of only 1.9% -- lower than the 2.8% for 2012 and only slightly better than the 1.8% pace of 2011. However, with 4.1% for the 2013 third quarter and 2.4% for the fourth, it is hoped that 2014 will see a larger growth spurt. Unfortunately, so far, the weather is not cooperating and most economists are ‘tapering’ back their forecasts. With China’s growth rate slowing, Europe just starting to get back on its feet, and Brazil showing weakness, the U.S. will have to grow largely on its own. Furthermore, it is not quite clear what will happen in Eastern Europe with the recent situation in the Ukraine. Still most economists are bullish on U.S. growth, business profits, and the economy.
market is maintaining new highs on the S&P index. So far, mortgage rates have been decreasing, but likely will rise a bit as the market heats up and ‘tapering’ continues. However, there are not likely to be large spikes in rates, so it will be a good year for real estate. The Fed is still holding short-term interest rates near zero and has promised not to move away from that position until jobs and growth improve. Eventually, there will be a pull-back in stock and bond prices, but nobody knows when or how much.
The Bottom Line The 2014 real estate markets have started a bit weaker than 2013 finished. That is to be expected, given the winter weather. Nevertheless, the combined February performance was pretty good. However, it is not reasonable to expect a second act of 2013 any time soon, especially with mortgage interest rates expected to rise this year. Low inventory continues to be a problem, but that will improve over the year. This likely will be a slightly slower year, but there will be plenty of money to be made. Just manage your buyers’ and sellers’ expectations.
The good news is that the most recent jobs report has had a positive major impact on the outlook for the economy and consumer confidence. Nonfarm payroll employment increased by 175,000 jobs (200,000 are good) in February. Economists generally feel the bad weather in February was a major negative factor, and that had the climate been more clement, the numbers would have been even better. The household survey for the unemployment rate came in with a slightly higher 6.7% rate. However, this was due primarily to an increased labor force, as job seekers became more optimistic about finding a job. Analysts also believe that the cold weather kept the first quarter GDP growth rate down by as much as 1% point; however, they expect that growth will be shifted to raise the second quarter rate by over 1% due to pent-up demand.
Monetary Policy, Interest Rates, and Inflation So far, the Fed appears likely to continue to cut monthly purchases of U.S. Treasury securities and mortgage bonds. At this point, it is expecting the economy to get stronger as recent labor reports have indicated. They have also publicly said they will continue to put pressure on short-term interest rates into 2015. While some investors have expected the stock and bond markets to fall with the ‘tapering,’ that has not happened based on theory. Other factors seem to be affecting both stocks and bonds, as the stock Capital Area REALTOR® • Mar/Apr 2014
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