Urban Pace Year to Date Market Update

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Y E A R T O DAT E M A R K E T U P DAT E AMIDST COVID-19 JUNE 8, 2020

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Y E A R TO DAT E

M AR K ET U P DAT E Urban Pace is pleased to provide a brief update on the DMV housing market as it relates to COVID-19 through the month of May. We track the market’s fluctuations on a weekly basis and have shared our previous findings in a series of extensive market studies and webinars released since the beginning of the COVID-19 outbreak. Please contact Urban Pace if you would like a copy of a previous report. What follows is an update of market changes within the last few weeks and some key highlights include: •Initial signs of a recovery •Increasing sales volume points to a strong summer market •Pricing continues to remain high •More buyers getting into the market

M A R K E T U P DAT E JUNE 8, 2020 An analysis of the past few weeks of residential real estate activity in the DC area reveals a market that is bucking established seasonal trends and showing initial signs of a housing recovery as the economic anxiety and physical restrictions of the COVID-19 pandemic begin to clear. Sales volume continues steady growth, prices have surged past 2019 averages for the first time since the COVID-19 outbreak, and listings figures indicate that there is still plenty of product yet to come to market—all factors that could contribute to an extraordinarily robust summer market. Below you will find select charts from our internal research that we believe capture the most notable data points and trends of this ongoing recovery.

DC/MD/VA - YOY - SALES VOLUME 1,800 1,600

SALES VOLUME

1,400 1,200 1,000 800 600 JANUARY 400

WK 1

WK 2

WK 3

FEBRUARY WK 4

WK 5

WK 6

WK 7

WK 8

MARCH

APRIL

MAY

WK 9 WK 10 WK 11 WK 12 WK 13 WK 14 WK 15 WK 16 WK 17 WK 18 WK 19 WK 20 WK 21 WK 22

WEEK SOLD

2019

2020

2020 started strong, with weekly sales volume in the DC area consistently outpacing 2019 until the first effects of COVID-19 were seen in the market (around early March, Week 10 in the chart above). Despite a steep drop-off at the end of the quarter, Q1 2020 volume was slightly ahead of 2019 numbers. Since reaching a low point in Week 15 (April 5–11), weekly sales volume has increased consistently, and in Week 22 was greater in 2020 than in 2019 for the first time since the downturn began. Sales volume in Week 22 (May 24–30) of 2020 was 2.9% greater than the same week in 2019. In a departure from the typical seasonal trend, sales in the week following Memorial Day (Week 22) were higher than the week before. This may indicate that pent-up demand caused by COVID-19 anxiety is beginning to release as stay-at-home restrictions are eased. The market is heating up just when a summer slowdown would normally begin, and it’s possible that more buyers who have been sitting on the sidelines will begin shopping over the next 60 days, stimulating an unusually strong summer market. Urban Pace will continue to monitor this pattern in the weeks to come. 2


Q2 CUMULATIVE SALES VOLUME 14,000 APRIL

MAY

12,000

12,008

13,262

10,503

SALES VOLUME

10,000

9,073

9,789

7,473

8,000

8,498

5,858

6,000

7,222

4,556 4,000

5,995 4,847

3,027 3,685

1,550

2,000

1,757 922 WEEK 14

0

WEEK 15

2,680 WEEK 16

WEEK 17

WEEK 18

WEEK 19

WEEK 20

WEEK 21

WEEK SOLD

WEEK 22

2019

2020

The above chart shows cumulative sales volume for Q2 2019 and 2020 compounded weekly. Through the second week of Q2 2020 (Week 15) sales volume was at just 58% of the 2019 total. Since then we have seen consistent increases in weekly sales, and through Week 22 sales volume has caught up to 74% of the 2019 total. If the market continues to buck the typical seasonal trends with an unusually active June, it is feasible that the second quarter could still finish with more than 80% of 2019 sales volume—a remarkable turnaround from its position just six weeks ago.

Q2 NEW LISTINGS ADDED 2,500 APRIL

2,193

2,121

2,299

MAY

2,267 2,057

2,000

1,898 1,473

LISTINGS

1,500

1,000

1,004

1,095

1,197

1,176

1,250

1,792

1,343

1,453

1,578 1,389

1,394

500

0

WEEK 14

WEEK 15

WEEK 16

WEEK 17

WEEK 18

WEEK

WEEK 19

WEEK 20

WEEK 21

WEEK 22

2019

2020

The chart above shows that while weekly listings have been increasing steadily, it is likely that an influx of new inventory could continue to fuel the market over the summer. The normally robust spring was dampened by the economic anxiety and physical restrictions imposed by COVID-19, with new listings in the first five weeks of the quarter totaling just 55% of the same period in 2019. While 2019’s new listings began to taper at that point, 2020 has not, and the last three weeks have seen the most listings added out of any in the quarter. The increased sales activity and high prices achieved in recent weeks will certainly signal to many that it is a safe time to list properties that have been withheld up to this point.

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Y E A R TO DAT E

M AR K ET U P DAT E 2019 - CONDOMINIUM 2019 - SFH 2019 - TH/ROW HOME

TOTAL SALES BY HOME TYPE

2020 - CONDOMINIUM 2020 - SFH 2020 - TH/ROW HOME

900 800

NUMBER OF SALES

700 600 500 400 300 200 100 0

JANUARY WK 1

WK 2

WK 3

FEBRUARY WK 4

WK 5

WK 6

WK 7

WK 8

MARCH WK 9

APRIL

MAY

WK 10 WK 11 WK 12 WK 13 WK 14 WK 15 WK 16 WK 17 WK 18 WK 19 WK 20 WK 21 WK 22

WEEK SOLD

Since the initial dip in sales volume from the COVID-19 outbreak from Week 11 (March 8–14) to Week 15 of 2020, the DMV market has seen increased sales across all home types. Condominium sales were the first to recover in Week 15 and have seen the steadiest increase in sales volume into the end of May, with an average weekly increase in sales of 11.4% from Week 15 to Week 22. Townhomes and single-family homes have also registered average weekly increases of 6.1% and 5.6% respectively. On a year-over-year basis, single-family homes were the first home type to eclipse 2019 sales volume since the COVID-19 outbreak began, exceeding 2019 totals by just over 12% in Week 22. Condominiums and townhomes are following close behind and are trending toward surpassing 2019 volume numbers in the next few weeks. This is promising news, as it suggests there is pent-up demand driven by buyers entering the market that were previously discouraged by the economic uncertainty caused by COVID-19. The seasonality of the DMV housing market typically entails high sales volume in the spring, with numbers tailing off into the summer months. However, Urban Pace believes that this pattern will be delayed in 2020, with unusually high sales volume in the summer months, since buyers were inhibited in the spring due to COVID-19.

AVERAGE SALE PRICE $650,000

AVG SALE PRICE

$625,000 $600,000

$575,000

$550,000

$525,000 JANUARY $500,000

WK 1

WK 2

WK 3

FEBRUARY WK 4

WK 5

WK 6

WK 7

WK 8

MARCH

MAY

WK 9 WK 10 WK 11 WK 12 WK 13 WK 14 WK 15 WK 16 WK 17 WK 18 WK 19 WK 20 WK 21 WK 22

WEEK SOLD

4

APRIL

2019

2020


Since the start of Q2 (Week 14 on the chart above), the average sale price across the DMV has fluctuated week-to-week around the same level as 2019. In the last three weeks (Weeks 20-22) of May, average sale price has considerably increased to prices at or above pre COVID-19 levels. Week 20 specifically saw average pricing increase to just over $627,000, which is the highest for all of 2020 YTD. Urban Pace believes pricing has recently spiked because buyers that had recently pulled out of the market are now flocking to buy as shelter-in-place orders start to subside. Heavy buyer demand coupled with low inventory has made for a competitive market in recent weeks, thus driving average prices up further. On a year-over-year basis, the average sale price now stands at 3.6% above 2019 levels, which shows that fundamentals of the DMV region’s real estate market remain strong despite the pandemic.

Q2 SALES REVENUE Q2 WEEK

2019

2020

YoY % Change

APRIL

$3,807,298,532

$2,373,734,665

-37.65%

WEEK 14

$911,264,979

$515,950,773

-43.38%

WEEK 15

$877,170,363

$502,146,002

-42.75%

WEEK 16

$900,509,674

$534,806,498

-40.61%

WEEK 17

$753,402,268

$581,763,441

-22.78%

WEEK 18

$959,043,350

$668,749,223

-30.27%

MAY

$3,618,770,055

$3,181,443,905

-12.08%

WEEK 19

$917,618,429

$668,435,627

-27.16%

WEEK 20

$840,352,429

$769,457,799

-8.44%

WEEK 21

$867,131,872

$776,824,147

-10.41%

WEEK 22

$718,369,415

$790,057,452

9.98%

TOTALS

$7,744,862,779

$5,808,190,962

-25.01%

COVID-19 heavily impacted the month of April, with year-over-year sales revenue down 43.38% in the first week and down 37.65% for the month overall (see table above). The month of May started off with similar shortfalls, but showed signs of a rebound in Week 20 (May 10–16), which was two weeks prior to the first phase of re-openings that started Memorial Day Weekend. In Week 22, weekly sales revenue exceeded 2019 totals for the first time since the beginning of COVID-19 effects, surpassing the previous year by almost 10%. This is reassuring data for the regional real estate market as stay-at-home orders are lifted and the economy starts to re-boot. Buyers started regaining confidence in the month of May and are trying to take advantage of historically low interest rates while they can. This is all encouraging news for Q2 2020, and Urban Pace anticipates seeing year-over-year sales revenues continue to trend higher, barring any setbacks in the COVID-19 re-opening process. Please let us know if you have any questions or if we can provide some additional data for your reference. Thank you for the opportunity to present this market information. *Footnote regarding data parameters: Cleaned Bright MLS sales data from DC, Montgomery, Prince George’s, Arlington, Alexandria, Fairfax and Loudoun Counties in DC, MD, and VA through 5/30/20

ABOUT URBAN PACE Urban Pace is a recognized leader in development real estate services including marketing, sales, leasing and advisory. Founded in 2001, Urban Pace has successfully worked in 7 states and currently has active projects in Pennsylvania, Maryland, Virginia, Washington, DC and Florida. Urban Pace is proud of its history in marketing communities that enrich the landscape of our cities and neighborhoods. Our footprint includes large-scale projects encompassing entire city blocks to historic properties transformed into luxury living spaces. We have proven success in driving traffic, maximizing revenue and mitigating developer risk. We have worked with over 275 communities and 7,000 homes with a volume exceeding $4 billion. 5


Y E A R T O DAT E M A R K E T U P DAT E AMIDST COVID-19 JUNE 8, 2020

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