If you’re a frequent reader of this newsletter, you might remember hearing about months of supply or contract ratio and how they can affect competition in the real estate market. If you’re like most people I know, it went in one ear and out the other, so I figured we should break it down again in the context of our current marketplace just for good measure.
The District’s real estate market is currently what’s called a “seller’s market” and has been for several years now. A balanced market should have about six months of supply. That means that if no new listings were added, it would take six months to sell all of the existing housing inventory. We are currently sitting just below a month and a half. Tight inventory leads to more competition for fewer properties.
“Contract ratio” is the number of listings available compared to the number of offers made on those listings. When the number of offers made is higher than the number of homes available, we end up with a contract ratio higher than one. That means that many homes are receiving multiple offers.
While all of this may be off-putting, a competitive market doesn’t mean that you shouldn’t be buying. It just means that you need to be prepared. Before you get your heart set on a property, let’s go over the contract so you’ll be ready to write your offer quickly. Interest rates are on the rise. Get your pre-approval and consider a rate lock so your dream home doesn’t end up out of your price range. Call me so that we can sit down and talk about some strategies that will make your offer the one that beats the competition!