President's Message, from Linda Simpson
Now IS the Time to Buy in Prince George's County!
As you have heard about for the past year, the real estate market is undergoing a national slowdown. The Prince George's County market is also experiencing a slowdown, but if we put 2007 into a historical perspective the market really did not do all that bad.
Comparing year-to-date totals from 2003 to present, we can see that 2007 was likely the county's fifth best market ever in terms of dollar volume, with roughly $2.5 billion in real estate transactions.
With the national slowdown, homes have been staying on the market longer. The average number of days that homes have been staying on the market has increased to 104 days, which is one of the highest rates in recent years.
The number of single-family homes for sale in the county doubled since 2006. This may seem dramatic, but keep in mind, inventory in the first half of 2005 was at one of the lowest points in history. Condo inventory experienced a similar upward trend, reaching its highest point in more than a decade, at just over 800 units.
The amount of new contracts being written vs. available inventory is explained in the absorption rate. The percentage of available single-family homes absorbed in the first half of 2005 grew as high as 119 percent. Last year at this time it had slipped to 40 percent. At the end of December, we saw a 6 percent absorption rate.
As for condos and co-ops, we have also seen the absorption rate fall from 40 to 11 percent in the past year. But again, the market is simply cooling off from extreme highs. In the middle of 2005, the absorption rate for condos was at its highest level ever at 173 percent.
Average single-family home prices have dropped by about $10,000 over the past year - or about $1,000 a month. Conversely, condo/co-op prices have increased by $5,000 over the past year. Our prices are still some of the best values in the metro area. You could likely afford to buy two condos in Prince George's County for the price of one in the District of Columbia.
So let's step back and put this all into perspective. What do all these dropping numbers mean? Well:
- Prices have stabilized and will remain stable or just inch upward in the coming year;
- Buyers have more time and options when shopping for a home;
- There are not as many instances of multiple offers being submitted on one property, which means less "buyer burnout" - or buyers growing tired of getting outbid on multiple properties;
- And appreciation rates are still increasing, solidifying real estate's role as a good investment.
Meanwhile, with the help of the County Executive's office, we recently won transfer tax decreases for police officers and teachers who live in the county. The Feds have increased interest rates, but look like they will keep them steady for the near future. And the number of homebuyer incentives continues to grow for Prince George's County residents.
Prince George's County certainly shows more affordability than anywhere in the metro area. And in terms of appreciation, the metro area appreciation rates usually beat the national trend. In short, it is an extremely buyer-friendly environment right now, and it is one of the BEST TIMES EVER to become a homeowner in Prince George's County!
So what do we see for 2008? The residential real estate market will continue to cool down from sizzling-hot highs to more normal rates.
Both the National Association of Home Builders and the National Association of REALTORS® recently announced that they foresee a rebound in real estate in 2008. And both associations continue public awareness campaigns emphasizing why it's a great time to buy.
The commercial sector will continue in an outstanding period of growth. Robust employment gains in both Prince George's and Montgomery counties will remain a significant source for growth. And last but not least, due to the affordability index, overall we expect another strong year for Prince George's County real estate, besting our neighbors in DC and VA.
Yes, it is great time to live, work and do business in Prince George's County. Real estate is a great value, we possess a wealth of livable communities, and people are finally realizing the economic viability and opportunity available in the county.
Best wishes for a great and prosperous 2008!
2007-2008 PGCAR President