Whats up everybody
Today we’re going to go over what’s happening in the DC area housing market because It’s kinda crazy around here.
You would think with the higher interest rates, the market would calm down but it’s the opposite. So let’s take a look at some of the data and then I’m going to share my experience working in this market 24/7.
Lets dive right in
Let’s start with interest rates. According to mortgage news daily, the average 30 year fixed mortgage rate on April 17th was 7.5% https://www.mortgagenewsdaily.com/mortgage-rates which is super high.
That being said, home prices in the DC metro which includes DC, Montgomery County, PG county and Frederick County Md and Northern VA are near record highs despite more inventory on the market.
According to Bright MLS, our local multiple listing service, the median sold price in March 2024 is up 10.1% from March 2023. That is the fastest pace of home price growth since February 2022.
Active listings were up 4% from a year ago, but the number of New listings coming on the market was 11.4% lower than March of last year.
And even with more active listings this year, the number of pending sales, or houses that go under contract, is down 4.6% from a year ago.
The average days on the market was 7 days this March, down from 9 days a year ago.
And our months of supply in March 2024 was 1.39 months up from 1.12 months a year ago. Just for reference, a balanced market is 4-6 months of supply. Anything less than 4 months is considered a sellers market so 1.39 months is crazy.
“The spring will be challenging for buyers as new listings have been slow to come to the D.C., metro area market and mortgage rates remain elevated. Buyers who wait for lower mortgage rates later this year could find more inventory, but they will also face even more competition as rate drops entice more buyers into the market,” Bright MLS said in its monthly market outlook report.
So now that we got the data out of the way, let’s talk reality.
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As most of you know, I work as a realtor in the DC area. Licensed in DC, MD and VA but specialize in the DC metro which includes the MD and VA suburbs right outside of the district. I’m in my 21st year as a full time realtor so you can imagine all of the different markets I’ve worked in.
And through them all, I have to say, I’ve never been more confused and yet not in the present market.
Let me explain
First why it all makes sense. Then why I’m confused.
It all makes sense because there are a lot of people out there like myself who would probably put their home on the market in the near future- I’ll be an empty nester next year – but will choose to stay in my home because I refinanced in 2021 for a 30 year fixed 2.865% interest rate.
It is so much cheaper for me to stay in my home, even though I won’t need the space and I would love to capitalize on the profits, than to sell and move.
And I have to admit, every time I see what homes are selling for like mine in this market, I contemplate selling. And then I think about where I would go and how much it would cost me.
And then I realize I’m too young to start renting for the rest of my life and I can’t afford to buy something I would like with these high interest rates and home prices, so I decide to stay.
And If I go through this scenario, I can imagine a lot of other people do too. I know I have clients that were going to sell but decided to stay for the same reason.
In fact, my current sellers are either leaving the area or are at the age where they are ready to just rent and reap the profits of this market.
My confusion is to why the buyers out there today are acting crazy! I’ve seen homes go under contract sight unseen for 200k over the asking price with these high interest rates.
I’m fascinated by how their minds work. I mean, its possible the market will continue to go up – there are industry insiders who are predicting 10 years of limited inventory due to the governments actions during the pandemic when they chose to stimulate the economy by making money so cheap.
And I guess if you know you will be staying for 10 years at least, it may make sense. But really?? Sight unseen, no inspection, and 200k over asking?
That’s a special kind of crazy in my opinion.
I’m also seeing a lot of private sales. Compass, my broker, sells about 37% of their inventory privately in the DC metro.
I myself have a seller who chose to sell privately and it worked really well. The seller got their price and the buyer didn’t have to compete. They did a yes or no inspection and had a loan and appraisal contingency. They did pay a premium to buy off market but it all worked out.
I’m actually encouraging my buyers to focus on off market homes as well. If you’re willing to pay the seller’s price, it seems a lot more reasonable than competing with the wild people that are throwing money at a home without even seeing it.
And not all houses are created equal. I can tell you from my experience in this market, right now I have homes that sold way over asking, Homes that sold at list price and my buyers just closed on a home they got under the list price.
Which makes it even more confusing. It’s literally house by house.
What I’m seeing is that houses that show really well, are marketed professionally and are priced well- which means under the last sold house – are the homes that are selling like crazy.
Over priced Homes in the same neighborhood are sitting without any offers until they reduce their price. So another strategy in this market is to look for homes that have been on the market for more than 2 weeks.
Buyers need to see the value, and if they do, they start to compete. And the escalation begins.
The one outlier in my market is DC, esp DC condos.
The average days on market for homes going under contract in DC was 19 days in March; that’s the highest in the region and roughly triple that of the suburban markets.
Months of supply for DC in March 2024 is 3.56 months up from 2.5 months this time last year.
DC got hit during the pandemic as everyone wanted space and then started to recover after vaccinations were introduced but its just not selling like the MD and NOVA suburbs.
There have also been a lot of news stories about rising crime in DC which doesn’t help.
Don’t get me wrong, Condos are still selling in DC, but it’s a much more balanced market than the suburbs.
So, bottom line, is if you want to buy in this market, be prepared. If you would like access to Compass’s private listings I mentioned, send me an email and we’ll set up a zoom and chat.
If you are thinking of selling in the DC area, let’s Talk strategy.
It’s not a market for the faint of heart and you need to be prepared to move quickly.
As for the ramifications of the NAR settlement, we have had buyer agency here in the DC metro for over 20 years so we’re used to it. Right now, it’s business as usual.
Will that change if the courts approve the settlement in July, I think so. I’m just not sure what it will look like. I don’t think any of us do, including the government who needs to figure out how people with VA loans are going to engage representation if the seller doesn’t pay.
So stay tuned because I’ll let you know what’s really happening – at least in my neck of the woods.
And if you missed the latest 2024 rankings of the best place to live in Maryland by niche.com, def check out that video next.