By Adam Pagnucco.
Data from April released by the Greater Capital Area Association of Realtors (GCAAR) indicates that a falling supply of homes for sale continues to drive home prices upwards. In Montgomery County, prices jumped 12% in one month while listings declined by 4%. Over the last year, listings in Montgomery County are down by 45%.
I asked GCAAR how the county’s recent increase in recordation taxes would affect housing supply. Here is their answer:
Recordation tax excise fees are paid for registering the purchase or sale of property. This extra cost above the sales price of the home is part of the closing process that buyers and sellers must settle to complete their transaction. In Montgomery County, recordation taxes are typically split between the buyer and seller; however, this arrangement is negotiable and market conditions can dictate the split.
Homeowners are already facing dauntingly high mortgage rates, and few options due to slowed development. A higher recordation tax rate adds to the affordability issues that already exist and creates yet another barrier to homeownership in the county. Recordation tax revenue is down over the last year versus projections. We believe, as does Council staff, that this would have a “negative impact on economic conditions” and “would result in a short-term reduction in the volume of home sales in the County” (Bill 17-23’s Economic Impact Statement).
GCAAR’s press release appears below.
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May 18, 2023
For immediate release
Contact: Christine Barnhart, Vice President, Strategic Communications, cbarnhart@gcaar.com
GCAAR housing stats | April ‘23
Median sales price increases 10.9% to $628,000 over March 2023 while days on market slips below 5 year April average
ROCKVILLE, Md. – The regional median sold price for residential properties for April was $628,000, representing an increase of 10.9% compared to the previous month and a decrease of 0.9% from April 2022. The average days on market for units sold in April was 21 days, 6% below the 5-year April average of 22 days.
The April information is the latest from the Greater Capital Area Association of REALTORS® (GCAAR), representing sales data for the Washington, D.C. and Montgomery County markets.
Washington, D.C. (compared to March 2023)
Median sold price: $676,500 (↑5.6%)
Average days on market: 29 (↓13)
New listings: 982 (↓17.6%)
Montgomery County (compared to March 2023)
Median sold price: $600,000 (↑12.1%)
Average days on market: 15 (↓12)
New listings: 915 (↓4.1%)
According to REALTOR.com®’s April 2023 Monthly Housing Market Trends Report, the national housing market continues to face challenges as affordability headwinds persist. The inventory of homes for sale, while higher than last year, is still well below pre-pandemic levels as fewer sellers are opting to list their homes than previous years, largely due to feeling ‘locked in’ by a lower mortgage rate compared to what is obtainable this year.
“In just one month, the regional median sales price increased nearly 11% despite little change in interest rates,” said Avi Adler, 2023 GCAAR president. “The number of new listings in Montgomery County and Washington, D.C. was down 44.7% and 29.5% respectively from April of last year. The limited housing supply continues to outweigh the impact of higher interest rates as far as home sale prices in our area are concerned, at least for the moment.”