DC Real Estate Market 2022
Hey, what’s happening in the DC Real Estate Market?
Everyone I talk to has been asking this question, so as we head into the holidays, let’s do one final snapshot of what’s going on in 2022.
First, some good news! There are some neighborhoods where homes are selling in less than a week.
What neighborhoods?
- In Maryland: Glen Echo and Cabin John
- In DC: Kent, AU Park, Colonial Village, Crestwood, Burleith
- In Virginia: Del Ray and Falls Church
Zooming out, let’s review a few statistics. These come courtesy of Bright MLS.
Median home price is up 1.4% over last year, at $550,000. This is still good news.
Home showings are down 42% across the region and number of homes sold are also down 42% across the region over last year. Dollar volume is also down. In DC, it’s down over 41%. In Montgomery County it’s down 32%, Arlington is down almost 49% and Alexandria City is down over 53%.
Is this just because of interest rates? Well, yes, that seems obvious, right? But what if the news reports that the prices of shampoo went up and sales went down. You might think that it’s because of the prices. But what if you go to the store and find out there’s actually no shampoo on the shelf? And the few bottles that are there have been damaged, or spilled and they are dripping down the shelf. (I’m looking at you, Caldor in Connecticut, circa 1980’s.)
So let’s look under the hood at something called the months supply. What is month’s supply?
Take the total homes for sale right now in a given category or price point, and divide it by the number of homes under contract or pending. This tells us how many months we can last if no other homes are listed for sale. For context – generally 6 months is considered a balanced market. When there were stories abound of dozens of offers going hundreds of thousands over asking price, the months supply was lower than a month.
In DC, there is 3 & ½ months of inventory for single family homes and condos have 4 & ½ months of inventory.
Montgomery County, Maryland single family homes under $1M are at 1.3 months of inventory and if you move to the $1M to $2M range, it’s 2.5 months of inventory. Heading to Arlington Virginia, it’s the same story as Montgomery County almost to the percentage. Of course, the number of homes in Arlington is a much lower number but the percentages of inventory are the exact same.
On condos, you have 2 & ½ months of inventory for condos in Arlington and 1.3 months in Montgomery County.
Alexandria City is just shy of 2 months inventory for single family homes and condos are also at 2 months.
The real story here is lack of supply. Even though sales are down, the number of properties being listed for sale is also down and I think we all know why!
First, lots of demand was “robbed” from the future when rates went as low as they did in 2021.
Second, anyone who can afford to move right now is lamenting the loss of their low mortgage rate and then reconsidering.
Third, I’m out there telling most of my clients who want to sell to consider renting their home for a year if they can make the numbers work. Does this help our inventory problem? No, but that’s not my job. My job is to advise my clients on the best real estate scenario to build their wealth. If you can keep your current condo or home and rent it and even just break even, that’s something we should take a closer look at.
What’s in store for Spring? While parts of the market may be in a deep freeze right now, it’s not going to last forever. Rates have leveled off and even come down a bit, lenders are busy coming up with new loan products to keep things moving and spring is coming. People need to move, it’s just what happens in this area. People come, people go.
Stick with me for 2023 and I’ll let you know how things look as we get into the spring real estate market. Until then, enjoy your holidays and family time and we’ll get back to it on the other side of the calendar.
