Home prices in the Washington area rose 11 percent in May from a year ago, as the area's housing market slowly but steadily recovers from rock bottom, economists said.
Montgomery County excelled with an 11.7 percent increase in median sales price compared to May 2011 -- a jump in price from $357,250 to nearly $400,000, according to monthly housing data released by Real Estate Business Intelligence.
Fairfax and Prince George's counties also saw strong gains in median sales prices of more than 7 percent, as the region's dwindling inventory of available housing has created a more balanced market for home buyers and sellers, said Anirban Basu, CEO of Sage Policy Group in Baltimore.
|The latest monthly housing report shows strong gains in home sale prices in every jurisdiction in the Washington area. (Source: MRIS Inc.)|
|Location||May 2011||May 2012||12-month increase|
The region's housing inventory was at its lowest level in May since 2005, according to the report.
The 10,510 active listings in May marked a 32.4 percent decline in listings from 2011, or more than 5,000 fewer homes on the market.
"During the worst periods of the housing market depression the supply of homes available was greater than the demand," Basu said. "The inventory has become more manageable."
Combined with near-record low interest rates for on home mortgages, the region has entered a housing market where buyers aren't willing to wait to buy a new home and sellers are more satisfied with the prices their listings are fetching.
The average days a house stayed on the market in May dropped to 56, a 20 percent drop from April and a 17.6 percent drop from this time last year.
"Buyers feel like they're getting a lot of house for their money," said Bonnie Casper, president of the Greater Capital Area Association of Realtors. "And sellers are doing well because they feel like they're getting good value for their homes."
More attractive sales prices could also be a draw for homebuilders, who now see a market with a strong buyer demand, according to George Mason University economist Stephen Fuller, who said while the market is on "the edge of normalcy," buyers and sellers should proceed with caution.
"There's just an enormous amount of uncertainty with the economy and it certainly influences individual decisions. Buying a house and taking on a mortgage is considered a risky venture," Fuller said. "That could dampen what otherwise could be a market for strong growth."