District of Columbia homes continued to sell at eye-popping prices last month. The median home sale price rose 6.5% year-over-year from $557,500 to $593,950 in January. The number of homes sold also increased by 98 homes to 482.
Interest rates are at 7.28%, but is District of Columbia still a seller’s market? Let’s look at the facts. Interest rates are at record highs, with few home buyers. But the inventory is so low that 24.9% of homes sold above the list price!
- If You Are a Home Buyer: You can avoid bidding wars and avail seller concessions if you buy a home now. The 8.5% interest rate and mortgage payments are significant, but rates are unlikely to drop in the next few months. If they do, you can refi.
- If You Are a Home Seller: You can lock in District of Columbia’s high home prices. The scarcity of homes in DC makes it a seller’s market. Homes listed on MLS sell faster and for 17.5% more than off-MLS homes. That could be thousands of dollars in additional proceeds if you sell via Houzeo.
The current District of Columbia real estate market statistics doesn’t reflect the national trend of high demand and low supply. Despite the strong housing demand, home sales tanked. The property prices in District of Columbia have increased regardless.
So, How is the Real Estate Market in District of Columbia?
Sluggish! Home values in District of Columbia rose by 7.8% in the last 5 years. Home sales increased by 16.8% in January 2024 YoY despite the mortgage rate climbing to 7.28%!
Even if mortgage rates continue to increase alarmingly, home sales will not falter. So, if you want to sell a District of Columbia property, now is the right time to list it on MLS.
» What is My Home’s Worth in 2024: Find your home’s market value in amid 2024’s current housing trends.
District of Columbia Real Estate Market Statistics
- Average Home Prices: The average median home price in District of Columbia is $593,950, up by 6.5% YoY. In 2024, the median sale price will keep increasing marginally due to DC’s tight inventory.
- Home Sales: As per January 2024 data, home sales decreased by 25.5% YoY! In January 2024, only 482 homes were sold, up from 384 in January 2023.
- Average Rent Prices: Rental costs vary statewide. An average tenant in Georgetown pays $2,950, while the one living in Alexandria pays $2,092.
- Median Days on Market: The median days on the market for homes for sale was 53 days.
- Pending Sales: The number of homes for sale declined by 16.8% YoY compared to 2023. Currently, there are 2,103 homes for sale in District of Columbia.
- Months of Supply: The average months of supply is 3 month. DC’s demand can’t be satiated with the low supply. DC’s house scarcity is worse than the national housing market.
District of Columbia Housing Market Predictions 2024
People have survived the shockwaves of skyrocketing mortgage rates and rising home prices of 2023. Here’s what we predict for District of Columbia’s housing market:
- Home Sellers Will Return to the Market in 2024: Sellers who chose the sidelines in 2023 will come back. Especially those who can’t avoid new jobs or want to move to a cheap place. Whitney, the analyst who predicted the 2008 financial crisis accurately, has forecasted that baby boomers looking to downsize will also add up to 30 million housing units. Yowaza!
- Mortgage Interest Rates Will Stabilize by the 2nd Half of 2024: Mortgage rates hit 7.79% in October 2023, the highest level in 23 years. However, the rate dropped to 7.35% in November due to the softening labor market and slowing economy. Even the annual inflation rate went from 3.7% to 3.2%. We think the rates will remain above 6%, but they will stabilize in the second half.
- The Number of Home Buyers Will Rise: The historically high interest rates averted buyers in 2023. But mortgage demand rose after the interest rates lowered to 7.35% in November. The easing inflation and stabilizing rates will bring back house hunters.
- Home Prices Will Continue to Rise: Home prices rose steadily in the top metros across DC YoY, reaching $593K in January 2023. Experts predict home prices will continue to rise until the low supply-high demand dynamic changes.
- New Home Constructions Sales Will Increase: 12.3% of homes purchased in September were new homes, the highest since 2022. Home builders offered $30,000 worth of concessions to attract buyers in 2023. We think builders and sellers will compete for buyers in 2024.
- iBuyers Will Continue to Make Lowball Offers: iBuyers offered 104.1% of market value in 2021. They offered 86% in 2022 and around 70% in 2023. Opendoor and Offerpad have lost billions of dollars in 2023. As they struggle to survive, they will make lowball offers.
Bonus Prediction: Buyer Broker Commissions Will Be Negotiable!
In a shocking turn of events, the jury in Missouri awarded more than $5 billion in damages to the Sitzer-Burnett plaintiffs. This motivated nationwide home sellers to file grievances against NAR’s Cooperative Compensation Rule.
NAR’s Cooperative Compensation Rule or Participation Rule states that listing brokers must offer competitive compensation to buyer agents if they want to list properties on an NAR-affiliated MLS.
Sitzer/Burnett v. NAR
The Bombshell Lawsuit that Could End Buyer Agent Commissions
Lawsuits like Moehrl, Gibson, Batton, Nosalek, and Batton 2 challenge the Participation Rule. They accuse NAR and other top real estate companies of colluding and conspiring to keep agent commissions high.
If the jury also finds the defendants guilty in these cases, buyer agent compensation may change. Buyer agents may become obsolete by 2025! Phew.
While buyer agents are unlikely to be obsolete in 2024, they may be open to negotiating commissions. That’s probably how they will still have some skin in the game.
When Will the Real Estate Housing Market Crash in District of Columbia?
A housing market crash in the Chocolate City is unlikely.
District of Columbia’s robust economy, diverse job market, and affordable cost of living will continue to attract businesses and individuals seeking new opportunities.
District of Columbia is a haven for several businesses and industries. Several cities, including Greenwood, Fishers, and Columbus, offer a variety of fun activities, such as visiting parks, savoring local cuisine, and exploring arts plus entertainment.
District of Columbia’s job market is also strong. The unemployment rate is at 3.10%. The average cost of living in District of Columbia is $42,697. The median household income is $73,000. Living near the rolling hills and verdant forests of District of Columbia is SO AFFORDABLE. It is unlikely that District of Columbia’s housing market would crash anytime soon.
2024: Is it a Buyer’s or Seller’s Market?
2024 will be a terrific market for sellers. (And buyers, too!)
Home prices in District of Columbia are rising and will continue to rise till the supply-demand dynamic changes. The number of houses for sale in DC was only 2,103 in January 2024. There is very limited inventory to satiate the demand from house hunters. This also makes it the best time to sell a house in District of Columbia.
In fact, after the mortgage rate plummeted from a two-decade-high rate of 8% to 7.28% in January, new listings rose. This shows that those who refused to sell due to mortgage rate lock are finally acclimatizing to 7% rates. Come Spring 2024, more homeowners will follow suit and list properties on District of Columbia MLS.
As home listings in District of Columbia increase, home shoppers hugging the sidelines will also return. In fact, the recent uptick in mortgage applications shows that buyers are returning.
House hunters who could not find affordable homes in 2023 will also start shopping in 2024. The demand for District of Columbia houses will increase – and that’s why sellers may be able to dominate the market.
However, new builds will compete for attention from buyers. Home builders have persuaded buyers to buy new construction homes with mortgage buydowns worth $30K in 2023! Builders will continue offering concessions in 2024, and home sellers may have to wage wars against them.
Listings of new constructions, baby boomers looking to downsize, and desperate home sellers will flood the market in 2024. The properties for sale in District of Columbia will increase. So, whether you are looking for a condo in Georgetown or seeking to live in a co-op in Alexandria, you will find your dream home next spring.
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Disclaimer: This article is for informational purposes only. It does not constitute an offer, solicitation of an offer, or any advice or recommendation. Houzeo doesn’t provide any legal or financial advice. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Houzeo Corp., its affiliates, or its employees. However, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness, nor does the author recommend that the attached information serve as the basis of any investment decision.
Frequently Asked Questions About DC Real Estate Market
Will the housing market crash in District of Columbia?
Not for the next few years. District of Columbia's housing market will not crash in 2024. Despite 2023's skyrocketing interest payments and soaring home prices, Washingtonians have managed to keep the market afloat.
What are the real estate housing market 2024 predictions for District of Columbia?
2024 will be a stellar market for Washingtonians. Here's our 2024 forecast for District of Columbia housing market are: (1) Home sellers will return to the market come Spring 2024. (2) Number of houses for sale will increase (3) Property prices in District of Columbia will increase marginally (4) Mortgage rates will stabilize in the latter half of 2024 (5) iBuyers will buy homes for lower than their fair market value. (6) Buyer agent commissions will be negotiable!
Are home prices dropping in District of Columbia?
No, the property prices in District of Columbia were up by 6.5% YOY in January 2023. However, you can still find some of the cheapest places to live in District of Columbia. With a 7.8% rise in the past five years, exploring budget-friendly cities is crucial amid the current scarcity of available properties in D.C.
Is it a good time to buy a house in District of Columbia?
Yes! Currently, there are very few buyers in the market compared to the supply of homes in District of Columbia. The soaring interest rates has kept buyers at bay, so you can avoid bidding wars. As the mortgage rate stabilizes in 2024, more buyers will return, so we'd recommend you to buy a house now. If mortgage payments burn a hole in your pocket, you can always refinance.
