How do I gauge the current health of the market and make predictions as to where things might be headed? The first indicator is what has happened to sales prices in the most recent month. June is the most recent month we have on the books, and home sale prices in suburban Maryland are up 3% year over year.
The second market indicator is mortgage applications, which give you an idea of where our future buyers are coming from. Since April, we’ve seen a continued increase in the number of mortgage purchase applications that spiked dramatically in June.
The most important indicator I look at is the absorption rate, which is simply a measure of how long it takes to go through all of the existing inventory that we have if, hypothetically, nothing else came onto the market. If we looked at a neutral market in the D.C. metro area, we’d see three to four months’ worth of inventory. When you get above four and start to hit five months of inventory, that indicates a strong buyer’s market. As of the second week in July, we’re at 1 ⅓ months of inventory, making it a super hot market for sellers.
That being said, buyers are still benefiting in our market thanks to those great long-term interest rates, so it’s the perfect time to act no matter what your real estate goals are.
If you have further questions about the condition of our market, or want to discuss how to best move forward given your scenario, please reach out via phone or email. I look forward to hearing from you!