The shortage of for-sale homes that vexed would-be buyers all summer is continuing into the fall, experts said, though the problem could ease as rising prices finally entice homeowners to put their properties on the market.
The number of residences on the market dropped to historic lows in September, plummeting 35.7 percent below levels seen during the same period in 2011 with active inventory 40 percent lower than the five-year September average, according to Metropolitan Regional Information Systems.
Overall demand appeared to be up with the number of new contracts at its the highest point in three years, MRIS data showed. Driven by the two trends, frustrated homebuyers drove median prices to a five-year high.
"When you couple an increase in demand compared to last September, as evidenced by the 5 percent increase in closed sales, with significantly lower supply, it is not surprising to see another month of annual pricing gains," said Corey Hart, senior project manager at RealEstate Business Intelligence. "Low supply, steady demand and low mortgage interest rates all contributed to the eighth consecutive month of median price gains compared to 2011."
Though the crunch has been most acute in close-in neighborhoods this year, the competition for homes is becoming heated in the suburbs as well. "Now I am seeing this as far out as Fairfax, Reston and Herndon and even in pockets of Loudoun County," said Adam Gallegos, a Realtor with Arbour Realty in Arlington.
McEnearney Associates Executive Vice President David Howell, who tracks new contract activity by month and week, said the number of contracts signed was up in September compared with the same month a year before.
"Things really aren't slowing down, at least compared to last year," he said. "Northern Virginia was up 11 percent, D.C. was up 31 percent, Loudoun County was up 23 percent and Montgomery County was up 16 percent."
Howell confirmed that the increase in contract activity, along with very low inventory, is pushing prices up in closer-in neighborhoods -- which, he said, should lead to a gradual rebound in inventory.
"Higher prices will pull more homeowners into the position of having equity, and they'll be more willing and able to sell when they don't have to bring money to the settlement table."
It would be reasonable to expect closer-in, more urban corridors to see increases in contracts in the range of 10 percent to 15 percent over the next year, Howell said.
All the activity has led Gallegos to go out hunting for sellers.
"We have been sending out a lot of postcards to homeowners in select neighborhoods to see if they would consider selling, because our potential homebuyers are getting anxious to find a home," he said.