DC Housing Market Crash

I didn’t want to do this video. But all this talk of a crashing housing market in metro DC is pervasive. It’s been mind-blowing watching reputable news outlets, one after the next, succumb to the pressure to report a housing market disaster. Someone reported a crash? We have to report the crash! Get the widow on the set we need dirty laundry! Thank you, Don Henley. Now we are well into the spring real estate market. There’s more data, and interesting things happening that you should know about. I’m going to tell you real stories from the front lines.

First, let’s talk real numbers. Now vs a year ago. Ready?

In Washington DC, new listings last month were down 9.2% from last year.
In Arlington, Virginia, new listings last month were down 12.6% from last year.
In the City of Alexandria, new listings last month were down 2.5% from last year.
In Fairfax County Virginia, new listings last month were down 3.2% from last year.
In Montgomery County, Maryland, new listings last month were up 2.3% from last year.

The region’s MLS had this to say: “More inventory and softer price growth would be welcome changes for prospective buyers in the market this spring.” What we need here are more homes for sale and we’re getting less, as reported, directly from the numbers.

So why was there a viral spread of information graphics showing all these alleged homes for sale in DC? You know why. It’s great news. Trump and Elon’s Department of Government Efficiency setting the place on fire makes a great headline.

That was last month. Now we will focus on the present and near-future.

The numbers being released as we start to move into the true spring season are telling – now there is an uptick in listings compared to last year.

Oh. My. God. Melissa, What did you just say? You said new listings were down! Now they aren’t? Why are the numbers suddenly going up for new listings?

1. Hello! It’s “Spring!” This happens every March! Attributing this increase in listings to the federal layoffs is disingenuous. More homes for sale in March vs February is typical.
2. The past few years have been anything but normal. Last year there was very little activity in both new listings and closed sales. Everyone held tight with the rising mortgage rates. Comparing this year to last year to illustrate a “trend” really doesn’t hold a lot of merit. And anyone who held out from selling last year is now selling this year, along with the people who were already going to sell this year.
3. This year we had an unseasonably cold winter. It was unrelenting. A couple snowstorms, but more significant were the almost three months of temperatures in the single digits to teens. When it takes your car longer to warm up than it does to tour a house, sellers decided to hold off. We’re finally back in the 40’s to 50’s, the school year is getting ready to wind down and this is another reason why there suddenly seem to be a pop of listings now in March.

Just when we thought the uncertainty of the last couple years would come to an end – when buyers finally realized mortgage rates weren’t going back down, when life kept happening to people – resulting in housing needs, we were primed for a busy and competitive spring market. And what we are getting now is… shoot, a busy and competitive spring market.

What I tell you is always 100% rooted in reality. What I see on the front lines, what my clients are experiencing – this is what I share with you. DC has always been a metro area of micro-markets. What is happening in one neighborhood may not be happening in the next. The pie always cooled from the outside, in, meaning that the exurbs would be the first to soften when the market turned. Of course, all that went sideways during and post-pandemic. The center of the pie froze, and the outsides were hot.

The reality inside the city limits of DC is that things have been sluggish for a couple years. There has finally been movement in the condo market. If a condo or house is priced right, it sells. But any graphics showing DC lit up on fire with sale signs isn’t a new thing. Also, please keep in mind, we have very dense living here. If there are a few condos for sale in a building of 100 condos, yes, there are going to be a lot of dots on those maps on the portals because they are all on top of each other. Our map in DC doesn’t look much different than other cities.

Stories from the Frontlines:

• In Vienna, Virginia this is the reality right now. There are 7-10 buyers for every home. My clients submitted an offer on a $1.3M, center-hall colonial with dirty wall-to-wall carpet, original windows and 1980’s bathrooms with vanities so low we were temporarily transported back to pre-school again.

Email response from the listing agent: Thank you for your offer. There were 8 offers and the home is under contract well over the asking price with no contingencies. Let me just explain what no contingencies means. The winning bidder waived home inspection, appraisal and financing. They put their deposit at risk to buy this home. And they weren’t the only one. The listing agent said 5 of the 8 offers fully waived all contingencies.

• In West Springfield, Virginia, this is the reality right now. My clients were waiting for a home in Coming Soon status to go active so we could tour. Once a home is in “Coming Soon” it cannot be shown per our MLS rules. Violate them and risk a $5000 fine. The house went straight to pending. There was nothing special about this house. It was another center hall colonial for $800,000. When I called the agent to find out what happened, she said that someone wrote an all-cash, non-contingent offer sight-unseen.
• In Bethesda, Maryland, this is the reality right now. A house with a GAS LEAK had multiple offers.
• In Arlington, Virginia, this is the reality right now. A house was listed for $1.4M. There were six inspections-before-offer. This is called a “pre-inspection” here and it’s common on the most desirable houses. The house went under contract more than $100,000 over list price.
• In Burke, Virginia, this is the reality right now. Homes are selling for $100,000 over asking to cash buyers. I toured a home that was greatly in need of work just to make it habitable. They had two offers just 12 hours on the market – one was cash.

Let’s think about this critically for a second. You work for the government. You have a steady job. You’ve been there 10, 20 years. Trump and Elon cruise into town and start willy nilly firing people. Some people who were fired got called back two days later. Other people were fired before their agency was even told to cut their staff. Everyone is operating in panic mode. For those of us here in the middle of all of it, there is one thing we can all say with certainty. When it comes to the fed layoffs, no one has any idea what the f*ck is going on.

Are people making major life decisions like selling their houses and leaving DC? No. And for the people in the back, NO! Are they giving up those cushy 3% mortgage rates? Also no. And, if they did get laid off, are they going to sell their house, pull their kids out of school and go rent somewhere else until they get another job? No, because unless you’re going to move in with family, this won’t solve any problems, and it will create new ones. You need a job and income to rent or buy a house. You have a house now, you have contacts here, you’ll find another job.

So this is what’s happening on the front lines. Yes, listings are now finally increasing. But there’s no exodus, as there are still up to 8 buyers for every house in many areas. We are back to what a “normal” spring market in the DC Metro Area has been for the past decade.