Washington DC Real Estate
Sold By Susan
The Isaacs Team | Recent Sales
Single Family Home
$2,800,000.
3,924 Sq Ft. • 6 Beds • 4.5 Baths
3800 T Street NW DC 20007
Single Family Home
$1,400,000.
2,400 Sq Ft. • 4 Beds • 3.5 Baths
1108 E Street SE DC 20003
Single Family Home
$1,799000.
3,204 Sq Ft. • 5 Beds • 4 Baths
1617 13th Street NW DC 20009
DC Real Estate Market Summary
With Susan Isaacs
In the District of Columbia:
- Median Sold Price for all home types in February was $613,500, up 12.6% from January and down 7% from February of 2022.
- Average Days On Market was 45 days, up slightly from January’s 42 days, and moderately higher than February 2022’s 34 days.
- Average Sold to List Price Ratio was 96%, meaning sellers were pricing homes fairly appropriately for the time of year and market conditions.
- There were 816 new listings, 645 new pending sales, and 516 closed transactions that reporting vendors were aware of (see ‘Off-Market Inventory & Sales below).
Visit the following links for details on individual home types, detailed DC market data and DC real estate values:
Off-Market Inventory & Sales
Keep in mind that a significant percentage of homes bought and sold in the District of Columbia are transacted off-market. This ‘shadow’ inventory is not available to third party sites and is unlikely to be included, or reported with accuracy, by any market data tool. For this reason, Washington DC market data should be viewed as informational, rather than absolute. Assessments of inventory may be quite skewed based on the now commonplace use of ‘Private Exclusive’ listings held by individual brokerages.
How The Economy Impacts Housing
Main factors that affect the housing market are economic growth, housing demand, unemployment. interest rates. consumer confidence, mortgage availability and supply.
Housing Starts
Tracking housing starts by new residential construction permits is a key in determining the health of a local real estate market. When the economy is strong, more new homes are built and sold. In weak economies, fewer permit applications are made and fewer new homes are sold. Housing starts are essential indicators of economic health, and affect related markets such as mortgages, land sales, raw materials and employment.
Home Sales And the Economy
There is a direct correlation between home sales and economic health. As economies slow, money supply becomes harder to borrow, and as a result, fewer home buyers enter the housing market. This leads to diminished home inventory and homes on the market take longer to sell. A greater supply of homes in a market with lower demand generally forces prices downward.
Money Supply Impacts Housing Sales
Money supply is critical to housing market health. When borrowing is too difficult, housing starts and home sales slow significantly. When borrowing is too easy, too many buyers enter the housing market and drive up prices until a market correction or crash occurs.
Foreclosures Reflect a Market Downturn
Foreclosures are an indicator and a result of a housing market decline or crash. If interest rates rise dramatically, borrowers with adjustable rate mortgages may not be able to refinance or stay current on the debt. This results in increased foreclosure activity. Mortgage type isn’t the only reason for heightened foreclosure volume.The leading causes of foreclosure are rising unemployment, debt (medical debt in particular), divorce, death of a spouse or partner who contributed income, and unexpected large expenses.
Economic Slowdowns
When the economy slows, it will affect the housing market, which in turn negatively impacts the economy as housing-related activities decline. This economic cycle breaks once economic improvement begins and housing prices reflect consumers’ confidence in their ability to take on mortgage debt.
DC Is An Unusual Market
The District is a unique and sought-after housing market– among the strongest in the country. Bouyed by the constant ebb and flow of government officials and contractors, Amazon’s HQ2, the tech sector, scarcity of land and the District’s small size (68.3 SqM), and its connectivity to adjoining states, Washington DC has weathered many declining markets well, and recovered quickly.
News | Markets Under Pressure
Main factors that affect the housing market are economic growth, housing demand, unemployment. interest rates. consumer confidence, mortgage availability and supply.
Powell's March 7th Remarks
Market Reaction
“There is little sign of disinflation thus far in the category of core services excluding housing, which accounts for more than half of core consumer expenditures. To restore price stability, we will need to see lower inflation in this sector, and there will very likely be some softening in labor market conditions.”
“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated”
“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”
Market response to Powell’s statements was swift. Major indexes fell more than 1% and the 2-year Treasury note jumped to its highest mark since 2007. Nasdaq lost 1.3%.
There is a 61.6% probability the Fed will raise its benchmark rate by 50 basis points on March 22, according to the CME FedWatch tool tracking fed funds futures pricing.
Investors increasingly anticipate the Federal Open Market Committee will beef up its rate increase after hiking by 25 basis points at its last meeting and 50 basis points before that. The slowdown followed four straight increases of 75 basis points.
March 10th Jobs Report
The March 10th jobs report shows higher than expected payroll increases for an 11th straight month, and more people joined the workforce. Employers added 504,000 jobs in January, and 300,000+ in February as the US labor market continued to show strength–but there were some signs of atrophy. While job opportunities are still historically high, they waned in January, and the level of layoffs rose to the highest since the end 2020.
February Inflation Data
Inflation eased on an annual basis but rose in February over the prior month. The Federal Reserve must decide whether to continue raising interest rates while the banking system is in turmoil.
The annual inflation rate in the US reached 6% in February of 2023, slowing for an eighth straight month and marking the lowest level since September of 2021. The reading came in line with market forecasts, and compares to 6.4% in January. The energy index increased 5.2%, and the food index increased 9.5%. Core inflation also edged lower to 5.5% from 5.6%. Compared to the previous month, the CPI rose 0.4%, following a prior 0.5% gain and also matching forecasts. The index for shelter was the largest contributor, accounting for over 70% of the increase. The core rate however, edged higher to 0.5% from 0.4% in January, compared to forecasts of a 0.4%.
March 14 CPI Report
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in February on a seasonally adjusted basis, after increasing 0.5 percent in January, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 6.0% before seasonal adjustment.
Shelter: The largest contributor to the monthly all items increase, accounting for over 70% of the increase
Food: The food index increased 0.4% over the month with the food at home index rising 0.3%.
Energy: This index decreased 0.6% over the month as the natural gas and fuel oil indexes both declined.
The index for all items less food and energy rose 0.5% in February, after rising 0.4% in January. Categories which increased in February include shelter, recreation, household furnishings and operations, and airline fares. The index for used cars and trucks and the index for medical care were among those that decreased over the month. The all items index increased 6.0 percent for the 12 months ending February; this was the smallest 12-month increase since the period ending September 2021. The all items less food and energy index rose 5.5% over the last 12 months, its smallest 12-month increase since December 2021. The energy index increased 5.2% for the 12 months ending February, and the food index increased 9.5% over the last year.
Banking Turmoil Game Changer
Release of the Inflation Report and CPI was overshadowed by banking turmoil news and analysts changed their predictions as a result. Phil Rosen of the Insider reports:
Nadia Evangelou, Sr. Economist & Director of Forecasting at NAR altered her 2023 outlook. On March 11th Evangelou said she anticipated home prices and sales to dip this year, with a rebound in 2024. On March 16th, her predictions revised:
“We had expected mortgage rates to come down to the lower range of 6% sometime in the second half of 2023, but now we may see that level in the coming weeks. The housing sector reacts immediately to changes in mortgage rates.”
Evangelou’s long-term outlook on a housing rebound hasn’t changed, mortgage rates look set to fall faster than previously expected, which could allow more Americans to enter the housing market.
Evangelou’s long-term outlook on a housing rebound hasn’t changed, mortgage rates look set to fall faster than previously expected, which could allow more Americans to enter the housing market.
Rates have fallen in the wake of the SVB collapse, and the number of people applying for mortgages jumped 6.5% compared to a week ago, according to Mortgage Bankers Association data.
Evangelou remarked: “If mortgage rates dip to around 6%, more people would be comfortable purchasing a home compared to when it’s around 6.7% or higher.”
At the Fed’s meeting next week, Evangelou expects policymakers to moderate their aggressive policy.
“The previous week I could see the Fed hiking 50 basis points, but now I think 25 basis points is the highest hike that they may take,” she said.
Many traders agree with her. CME’s FedWatch Tool tells us that markets think the odds of whether the Fed makes a quarter-point move or no move at all amount to basically a coin toss.
March 21 Housing Report
The rebound in U.S. existing home sales was stronger than expected, as lower mortgage rates and the first year-on-year decrease in prices in 11 years drew buyers into the market.
The jump in sales of previously owned homes, reported by the National Association of Realtors (NAR), was the largest in more than 2-1/2 years and ended 12 straight monthly declines in sales, the longest such stretch since 1999.
- Existing home sales jump 14.5% in February
- Median house price falls 0.2% to $363,000 from year ago
- Supply increases 15.3% year-on-year to 980,000 units
It was the largest monthly percentage increase since July 2020. NAR reported month-over-month sales rose in all four major U.S. regions.
Total existing-home sales increased 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February, though year-over-year sales were still down 22.6%.
NAR Chief Economist Lawrence Yun said:
“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”
Total housing inventory for February was 980,000 units, unchanged from January and up 15.3% from 2021. There is a 2.6-month supply of homes at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.
“Inventory levels are still at historic lows,” Yun commented. “Consequently, multiple offers are returning on a good number of properties.”
February Highlights:
- First-time buyers represented 27% of buyers, down from 31% in January 2023 and 29% in February 2022, showing the impact of higher rates and tightening credit;
- 28% of sales were all-cash, mostly unchanged from 29% in January and up from 25% in February 2022, showing that cash buyers are taking advantage of weaker market conditions relating to higher interest rates;
- 57% of respondents reported that properties sold in less than one month. This is up from 54% a month ago and down from 84% in February 2022;
- Due to the lack of housing inventory, the pace of the market, and the use of technology, 7% of buyers purchased a home based only on a virtual tour, showing, or open house without physically seeing the home. This metric rose from January and dropped from one year ago.
What's Next?
The collapse of SVB Financial–the biggest bank failure since 2008–and additional bank woes involving Credit Suisse and First Republic–increased concerns that higher interest rates are threatening lenders.
At the U.S. Federal Reserve meeting March 21-22, bank failures will be reviewed, along with the retail sales report and reports on producer prices, housing starts and industrial production for February as a decision is weighed on another rate increase.
Rate Decision
The Fed’s decision on an interest rate increase has been announced. There will be a raise of 25 basis points, rather than a pause, and a change to guidance, specifically that some additional adjustments will be likely required, in lieu of continuing adjustments. Interest rate changes to be made meeting to meeting.
Many experts expect the previously anticipated increase of a 50 basis point increase but revised expectations to 25 basis points as a result of banking turmoil.
National | Regional Summaries
National Real Estate Market
DCMA Real Estate Market
Low housing inventory has been a challenge since the 2008 housing crash when the construction of new homes plummeted. It hasn’t fully recovered—and won’t in 2023, predicts Forbes Advisor.
This historic low in housing supply has supported demand compared to other downturns, increasing home prices.
At the current sales pace, inventory is at a 2.9-month national supply, per the National Association of Realtors (NAR), a supply consistent since December 2022, though up slightly from a year ago. Most industry experts don’t see inventory normalizing for some time to come.
“I believe we’re likely to see low inventory continue to vex the housing market throughout 2023,” Rick Sharga, EVP of Market Intelligence at ATTOM Data stated.
With approximately 70% of current homeowners carrying mortgage rates of 4% or less as mortgage interest rates continue their rise into the 6-7% range in 2023, we’re unlikely to see new listings flood the market.
Single-family construction starts in January were down 4.3% from December, and applications for building permits declined by 1.8% from the previous month, according to preliminary data from the U.S. Census Bureau and HUD.
Despite this, the latest intel from NAHB/HMI, which tracks builder sentiment, rose seven points, from 35 to 42. This is the second month-over-month increase following 12 consecutive months of declines, but there’s no denying builder confidence is low, a score of 50 or above on the scale means more builders see good conditions ahead. We’ll need to see more consecutive upticks before there’s a significant rebound in new construction.
The DC Metro Area includes Washington DC and parts of Maryland, Virginia, and West Virginia. It’s important to clarify the areas of the region being used by data reports before relying upon their numbers. Real estate is local first, so while we look at data for various regions surrounding the District of Columbia, our primary focus is on the District itself, parts of northern Virginia, and particular Maryland counties. We find this to be the most accurate representation of the market we live and work in.
The median sold price for homes in the DCMA was $505,000 in February 2023, up 2.8% since last February.
Median Days On Market was 22, up significantly from 7 days a year ago.
Median Price Per Square Foot was $261., down 1.1% from last February.
—Data from SmartCharts Pro
Global News | Recession Watch
The Conference Board
Global Recession Map
Global leading indicators signal a likely further slowing in global GDP.
Declines in real GDP per capita are often associated with recessions.
The Conference Board
Global Forecast
Global real GDP is forecasted to grow by 2.3 percent in 2023, down from 3.3 percent in 2022. Most of the weakness will be concentrated in Europe, Latin America, and the US. Asian economies are expected to drive most of global growth in 2023, as they benefit from ongoing reopening dynamics and less intense inflationary pressures compared to other regions.
Despite rapid monetary tightening, inflation is proving persistent in many key economies, particularly on the back of strength in job markets amid severe labor shortages. Therefore, monetary policy is likely to remain restrictive throughout most of 2023. This will act as a break on economic activity and will likely lead to increases in unemployment rates in various economies, particularly in Europe and the US.
Global real GDP growth should pick up steam in 2024 to 2.5 percent and be more evenly distributed among regions. Tailwinds to growth in 2024 will largely come from fading shocks related to the pandemic, elevated inflation, and monetary policy tightening. However, growth rates in 2024 and beyond are likely to be below the prepandemic trend, given ongoing supply-side weakness (e.g., ageing demographics worldwide and slow productivity growth). Inflation, while lower than experienced currently, may remain relatively elevated for several reasons, including expected persistence in labor shortages.
The Conference Board
U.S. Economic Forecast
The Conference Board forecasts that economic weakness will intensify and spread more widely throughout the US economy over the coming months, leading to a recession starting in mid-2023. This outlook is associated with persistent inflation and Federal Reserve hawkishness. We forecast that real GDP growth will slow to 0.7 percent in 2023, and then rise to 0.9 percent in 2024.
US GDP growth defied expectations in late 2022 and early 2023 data has shown unexpected strength. The US economy, and especially the US consumer, has resisted the duel headwinds of high inflation and rising interest rates. Because of this, we are increasing our Q1 2023 forecast to 1 percent. However, we continue to forecast that the US economy will slip into recession in 2023 and expect GDP growth to contract for three consecutive quarters starting in Q2 2023. These changes to the quarterly forecast result in an upgrade to our annual forecast for 2023 and a downgrade to our annual forecast for 2024.
The recent collapse of Silicon Valley Bank and several other smaller banks has triggered alarm about financial stability in the United States (see our analysis here). While we do not think this risk is immaterial, we do not expect the contagion to spread more broadly throughout the banking system. The direct macro implications should thus be minimal. However, there may be implications for US monetary policy. At present, we do not expect the Federal Reserve to pause interest rate hikes, but at the same time, we do not expect increases in excess of 25 basis points moving forward. We believe that the Fed will hit its terminal rate window of 5.25 to 5.50 percent in Q2 2023.
Labor market tightness will moderate somewhat over the coming quarters but will remain elevated relative to previous economic downturns. This should prevent overall economic growth from slipping too deeply into contractionary territory and facilitate a rebound in early 2024. Inflation will continue to cool over the course of 2023 as well, but the Fed’s 2 percent inflation target will remain elusive. As such, the Federal Reserve will not cut interest rates until next year, in our view.
Looking to 2024, we expect the volatility that has dominated the US economy over the pandemic period to diminish. We forecast that overall growth will return to more stable pre-pandemic rates, inflation will drift closer to 2 percent, and the Fed will bring rates back below 4 percent. However, due to demographic challenges we expect tightness in the labor market to remain an ongoing challenge for the foreseeable future.