Buying a House in DC

We are more than halfway through one of the most tumultuous real estate years we have seen in DC since Covid. Should you believe the headlines or are they all hype? Why, despite the headlines and the mortgage rates, is owning property still one of the smartest long-term moves you can make. You’re going to learn why today once I tell you about the one real estate mistake I made.

I want to repeat a word I said in the introduction. Long-Term. Above anything else, this is how you should always think of real estate. 

Inventory is still tight Northern Virginia and Maryland, especially for move-in ready homes with great schools in walkable neighborhoods. Buyers are circling. They are waiting. They are watching. They are moving slower because rates are hovering in the mid-6s to low-7s, and people are cautious.

Some homes listed for sale are sitting while others get snapped up in days. Every single agent I have spoken to has said the same thing. If they got multiple offers, they are feeling very lucky. If they have a listing that’s not selling, they can point to a perfect comparable across the street or around the corner that just sold for more money. It’s a weird, patchy market right now. 

So, what does this mean for you and your home search?

Before we jump into that, I’m not going to make you wait to hear what this big mistake I made was. Yes, I have made mistakes. My real estate intuition is excellent, but it’s been honed over many years of doing this. 

I bought my first home in a balanced market, and I sold it in a market that was heating up but wasn’t near peak yet. I received multiple offers and got over list price. I bought my second home for list price in a crazy multiple offer market, and I still own that home. The real estate market then hit the 2008 bubble, and because I was working in the homebuilding industry, I suspected this was going to happen. I had been saving my money. The market was terrible, and off I went to buy a newly built home in a second-home-market, near the beach.

I loved it, but it was in a planned community. There was a lot of drama with the people who lived there, the developer who built the homes and the town.  The house was about 15 minutes from the beach, but that drive turned to 45 minutes during the summers when all the tourists came to town. Several years later, it got old once the girls were born. We would sit in traffic to get to the beach, then turn around and the girls would be fast asleep. 

After a few years, I thought, “We never come out here anymore, it’s time to sell it.”

My carrying costs on this house were very low, but I didn’t think it was a house that would get a decent long-term renter. I wasn’t interested in being a landlord. It became a drag to maintain so I listed it for sale and within a few weeks I had a contract. House was sold. I made some money, not a lot but I made some money.

A couple years later when Covid hit, I was like darn it, I miss that house. That would have been a good place to camp out. A couple years after Covid, the people I sold it to ended up selling it. For twice what they paid when they bought it from me. I about fell out of my chair. I never would have predicted that would happen, and I still don’t get it. They got lucky, because none of the other homes have sold for that much. But, the development wave finally hit that town, some of people who made it not so great ended up leaving, new people moved in and prices started skyrocketing. 

I never should have sold that house. My insecurity about it came from the fact that I always questioned if it was a good deal when I bought it, in 2008. The market was terrible, and second-home markets do not move with any predictability or regularity. It can take 5x as long for second home markets to rebound when there’s a crash. It was eight years with very little increase in value. But then it took off, and doubled in five years.

I wasn’t wrong for buying in a depressed market. That was the good decision. But I stopped trusting my decision when it took extra-long to feel like a good investment. I know two things now. First, I know how to make more calculated investments. The infrastructure must be there. Houses must be in desirable areas with desirable features and not have any fatal flaws. Since I sold that house, I have purchased one home a year and I won’t be selling any of them – ever.  

Second, I know that buying in a down-market or at unpredictable times is always worth it. Why? Because unless something catastrophic happens, house prices always go up. 

Oh and hello! We’re perceivably in a down-market right now depending on who you ask. Buyer sentiment is down even though some areas are still selling. Many areas in Northern Virginia are still seeing multiple offers – yes, even in the middle of summer. But other homes are sitting with no discernable reason. Like I said, it’s patchy – which is why the agents I have spoken with are all baffled when their home sits without offers but one across the street in similar condition sells for $100,000 more within a few days of being listed.

There is no waiting for a unicorn market. There is no magic moment where prices drop, rates drop, and the perfect house with a yard, walkability, top-tier schools, and a kitchen that doesn’t need gutting just appears. That doesn’t exist. Right now, there are pockets of opportunity that many buyers miss, unless someone points them out. (Hi, that’s me.)

Where are the Opportunities?

Inside DC is where there is the most opportunity. If you are looking to live in the city or want to pick up an investment property, now is the time. This isn’t a risky gamble. The city may not be super appealing to a lot of people right now but will this last? It’s not like we’re some small town in the middle of a huge state and the town’s only employer left.  Let’s drill down.

One of the most historically competitive DC neighborhoods has been Zip Code 20016 of which most is AU Park. The median price for the last 6 months is $1.4M which is down 18%. If you can bet on anything here, it’s that this neighborhood has a lot of DOGE casualties.  Cleveland Park’s median price down 12%, standing at $1.675M. Palisade’s prices are down 20%. But here’s something super interesting. The higher the price point, the more the price increases. Kalorama’s prices are up 32%, with an average price point of $3.95M. Forest Hills prices are up 14% to almost $2.4M. Georgetown prices are up 16% to $2.35M. Spring Valley up 17% to $2.45M and Wesley Heights up 34% to $2.18M. Dupont and Logan Circles – also up almost 20% from last year, but coming in just under $2M.

Guys. DC isn’t dead. People with money are spending money. People at the price points under $1.5 are still cautious and holding on.

Maryland is the next place where I’m seeing opportunity. Take Bethesda as an example. One of the shining stars of Montgomery County, Bethesda has rarely seen a market where homes don’t sell. Yet, there are properties sitting on the market that would have been snapped up in hours anytime in the past 15 years. In the last 90 days, the average Days-on-Market for Bethesda properties to get a contract is 21 Days. The median Days-on-Market is 8 though – meaning that half the homes sell in less than 8 days. But currently, for the actively listed homes, the mean Days-on-Market is 54! 

What happened? What’s not selling? Homes that start out overpriced. And we always have a summer slowdown, but this is hitting some homes harder than others. 

Walt Whitman High School in Bethesda is regarded as the premier high school in the county. I’ve argued that it’s not any better than the other Bethesda High Schools but that’s a conversation for another day. Just know that the perception is that Walt Whitman is the Harvard of the area, and the things people go through to buy a house in Whitman is mind-boggling. I’ve conducted searches over the past decade for clients who had to be in Whitman. There is usually nothing for sale under $1.5M. Today? There are 80 total homes for sale in Whitman and 21 of them are under $1.5M. The average and median Days-on-Market for these homes is at 32 days.  

Here’s the good news too. Prices aren’t falling in Bethesda. They are up a very respectable 4% over last year.

While Northern Virginia has been on fire, there is a chance for opportunity is in many parts of Northern Virginia. The Days-on-Market averages on homes sold in Arlington in the last three months – median is 7 days and average is 22 days. But for the homes currently for sale? Average Days-on-Market is 90, median is 67.

Fairfax County is also at a median 7 days on market for houses closed in the last three months, and 19 days on average. Currently though, there are also homes sitting on the market the county. Median Days-on-Market is 47 for and average is 76. Fairfax County is very diverse though. Not all areas are faring as well as others. It’s important to drill down to not even the town, but the neighborhood. Again, remember what everyone is saying – patchy. 

I keep saying this but it’s worth saying again. Buying a home in a market where people are fearful, in an area of the country that won’t collapse, that always shows increases in market value, will always be worth it. Down-markets are rare. We’re in one. Plan to buy but plan to hold. Where people get in trouble is when they plan for real estate to be a short-term investment. 

Most sellers right now are concerned and hoping for the best. If they don’t receive an offer in a couple weeks, they start to consider a price reduction. Catch that seller right before a price drop. This is when they are at their most vulnerable. Once they drop the price, the seller has a renewed confidence for the home to sell, plus, it regenerates buyer interest.

Real estate isn’t about what a neighborhood or a market looks like right now. It’s about where it’s going. If you can hold on for the long haul, and have a bit of faith and a bit of courage, you can absolutely win by going while others hesitate.

Whether you’re upgrading, relocating, or buying your first or second home—real estate is still one of the most powerful tools for growing generational wealth. I don’t care what the rates are this quarter. They’ll change. But you know what doesn’t change? Land in the DC Metro. They’re not making more of it.