I thought it would be visually helpful to show the ebb of and flow of the DC Metro area's housing market. And since I just learned how to rotate a GIF image, I'm making up for all the art classes I never took in high school (band).
I trended a decade's worth of the robust web data from the regional MLS (RBI, a division of MRIS)—monthly new pending home sales and median sales price in a two year moving window. I also inserted some commentary on the milestones during the decade (i.e. highest points for price and sales, lowest points for price and sales, Lehman/credit crunch, tax credit, etc). Hopefully it's not too distracting.
At the end of the animation I include the entire window. If you are new to real estate or never thought much about it, I think it's pretty apparent that housing is wildly seasonal on an annual basis and the use of month-over-month comparisons is unadjusted for it, and for lack of a better word, is quite useless.
New Pending Home Sales (red columns) - the number of contracts signed during the month. Total pending sales include contracts that are over 30 days and therefore don't reflect as current a picture of activity as "new" does.
Median sales price (blue line) - Closed sales so they will lag the market by 45-60 days (pending prices are not available in any MLS systems I am familiar with) but removes the outliers (highs/and lows).
A few macro takeaways:
- The DMV housing market continues to improve. You can see it through the ebb and flow of the annual seasons. Sales and prices continue to rise since the formal onset of the credit crunch in 9/08 when Lehman went bankrupt and AIG, Fannie and Freddie were bailed out.
- I'm a bigger fan of sales as a barometer for market health than I am about price. Sales activity leads price trends. You can see it in 2006 when sales began to fall sharply as prices remained elevated. Imagine the rationale for buying in December 2007 when contracts were at half the level of prices in December 2004. "What market decline are you talking about? Prices are booming!"