There’s more than a little confusion surrounding the national real estate market right now, and here in DC things aren’t much different. Sellers wonder how they went from pre-market bidding wars to double digit days on market, buyers are shell-shocked by rapid-fire rate hikes, investors are holding back, hoping for more price improvement, and real estate agents? Just trying to hold it all together while we help clients navigate a transitioning market.
Amidst all the chaos and confusion are a few clear facts:
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Prices–at least in Washington DC–aren’t falling like the sky around Chicken Little. There’s some softening, more flexibility in offer terms, fewer bidding wars, but the current sold to list price ratio in DC is still 98.7% across all home types.
So there’s a little wiggle room to entice buyers. Mostly, agents have stopped their insane practice of grossly underpricing properties to incite bidding war madness and are pricing closer to market value.
Added bonus for buyers: The holidays are approaching. This is one of two times during the year a mass exodus from DC takes place. During Covid, travel was restricted. While the pandemic is technically not over, most people are treating it that way, so expectations are that lots of people will be leaving the District over the next 60 days. It’s typically a lower-volume time of year in the real estate market, which means homes on the market can expect less traffic, creating even more opportunity for buyers.
This lull in the market is an ideal time for buyers who’ve been priced out of the market–not by mortgage interest rates, but by competition–to snag the home of their dreams. Prices have steadily increased over the past decade, across home types and neighborhoods in DC, and this dip will end as others have, with steadily increasing prices. Buy low, sell high. That’s the ticket!
Sure, rates are higher than we’ve become used to, but remember that they’ve been unusually low for more than a decade–since the Great Recession. It’s a fact that you can refinance your rate, but not the price you pay for your home. That’s the big number–the one you want to focus on.
And if you’re hoping things will go far enough south to drive prices down to 2019 territory? Well, you’re going to miss out on a good opportunity right now. Yes, many analysts are projecting another recession in 2023, but nothing like what we experienced in 2007. As we reported in September, experts say a return to 2019 home prices would require a housing market crash over 50% more severe than the Great Recession. That’s not on anyone’s Bingo card.
So right here and now, there’s an opening for buyers to finally contract on the home they want, using a rate-dampening loan program like a 5/1 ARM they can refinance in a year or two, and actually have their cake and eat it, too.
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Okay–great for buyers, then–but what about sellers? Where’s the seller cake?
In fairness, sellers have been hogging the real estate market cake for many years! But sellers should also look at the end of 2022 as an opportunity. There will be fewer homes on the market later this fall and in winter, so yours will stand out more than it will right now. Make sure your home’s presentation is good–the days of slapping a fixer on the market ‘as is’ with a few cell phone photos and getting multiple offers are probably gone for the foreseeable future. Be flexible about contingencies and escrow periods. Call us and let’s work out the right strategy for your particular circumstances.