Welcome to our Market update video where we explain what’s happening in the DC Metro area real estate market so you can make the best home buying and selling decisions.
For the past two years, demand for housing was high driving quick sales and keeping the number of homes for sale at any moment incredibly low. We’ve seen the number of homes for sale rise recently but is still well below pre-pandemic levels.
Rising inventory has caused average sales prices to fall over the past 6 months, however, October bucked that trend with a slight increase in average sales price.
One of the big stories is the number of homes Selling. There were 29% fewer homes sold this October than is typical for October over the past 5 years.
With less homes selling, inventory should be piling up, however the number of new listings coming to the market was also down 25% more than expected stabilizing the market.
What we are seeing in the DC area is consistent with what is happening throughout the US, with the number of homes selling decreasing everywhere.
This slowdown in activity is primarily due to the rise of interest rates. The 30 year fixed mortgage rates have increased 4 percentage points in the past year, which is the biggest year to date increase in rates over the past 50 years
The good news is Freddie Mac is predicting that interest rates will decrease over the next year, averaging into the low 6’s. While still higher, that will be more in line with average interest rates over the past 50 years.
So overall the market is softening but stable. The supply is increasing but not enough to meet demand keeping prices from falling dramatically. There are still plenty of people who want to buy a home in the DC Area and the “best homes” are still receiving multiple offers. Given high-interest rates, buyers are willing to wait rather than buy something that is less desirable or needs more work. If you are thinking of selling a home, now is a good time but you definitely want to clean it up before you sell. You can’t just put anything on the market and expect to get top dollar like the past few years.
If you are a buyer, we recommend that being patient but prepare to make and offer if the right opportunity presents itself. The holidays are always a slower time. If you have the appetite for a fixer upper, the next few months may present some very nice options. You may be able to buy a home for a discount and refinance for a lower rate in the next couple of years.
If you are worried about mortgage rates, know that there are some very interesting products out there to decrease your monthly payment and also some programs for first time buyers coming back.
Everyone’s situation is different though so if you are thinking about buying or selling a home, give us a call and we will discuss your personal circumstances to help create a plan to use real estate to reach your personal and financial goals.