January showed an encouraging decline in inventory in the close-in Metro area, from the high 9 month supply in December to a 7.6 month supply. The volume of sales is still much lower than a year ago, but surprisingly, the average sales price in Washington, D.C. went up for the fourth month in a row with a hefty 11.5% increase over January of last year. This underlines the fact that the District has been the most successful market in the Metro area for the last several months, with well-priced single family homes in NW Washington picking up momentum in recent weeks, sometimes getting two or three purchase offers as soon as they hit the market.
The good news for buyers and sellers is that the spring housing market will benefit from two processes in motion. One is the Federal Reserve Bank's aggressive lowering of the Fed rate, which immediately affected short term loans and should have the ultimate effect of lowering the cost of many mortgage products. The second change is the Federal government's approval of the economic stimulus package which includes an increase in the conforming loan limit from $417,000 to around $600,000. This will make bigger loans cheaper, and should give the spring housing market a genuine boost, both here in the Metro area and across the country.
* Statistics are taken from the Metropolitan Regional Information System for three areas: Washington, D.C.; Montgomery County, Maryland; Fairfax County, Arlington and Alexandria in Virginia.