Pressure On The Housing Market In Washington DC

Down, But Not Out

Why the DC Real Estate Market Isn't Taking a Dive

At the end of May, a time when DC real estate is typically racking up significant price increases with each bidding war. and market activity is at its annual peak, the outlook for late spring is about as sunny as today’s weather.

Last week, mortgage interest rates rose to near 7% again, putting the kibosh on home purchases for many buyers. Sellers–knowing prices are softer than usual, even falling for some neighborhoods and home types–are holding back until the market improves, contributing to lower inventory vexing willing and able buyers, but a good measure of price stability, as well.

In the District of Columbia:

April 2023 Washington DC Market Highlights

  • All Home Types: Median April Sold Price was $676,500., increasing 5.6% from March 2023, but decreasing 3.2% from April of the previous year;
  • April Average Days On Market (DOM) was 29 days, ticking up from the 5 year average of 26 days;
  • The April Average Sold to List Price Ratio was 98.3%. This was an increase of 1.0% from March 2023;
  • The District saw 1,762 Active listings in April, higher than the 5 year average of 1.573, 982 New listings, 768 new pending sales, and 610 closed transactions reporting outlets could track (on-market listings).
  • The April 2023 median sold price for DC Condos & Coops was $516,500, an increase of 13.5% from March 2023, but lower by 4.4% than April 2022;
  • Attached properties median sold price in April was $629,000., up 4.8% over March, but down 3.2% from April 2022;
  • Median sold price for Detached properties in April 2023 was $1,115,000., a substantial increase of 13.8% from the month prior, but down a hefty 20% from April 2022.

Market Uncertainty

The Challenge Of Valuation And Pricing

Sales volume is down from a year ago, but buyers are still experiencing competitive situations when vying for a well-presented, well-priced home. This makes for a confusing discussion with buyers and sellers. Realtors experience more uncertainty when valuing and pricing homes. Listing strategies are shifting with rates and national financial indicators.

The surest way to avoid mistakes in valuation and presentation is to list off-market. Tools like Compass’ ‘Private Exclusive’ listing network allow sellers to test the market for price and presentation without the punishing effect of the MLS Days On Market count. Sellers can get feedback on their home and the posted price, make tweaks if necessary, then put the property on MLS with more confidence. Buyers often have the opportunity to purchase without competing, which means the listing never transfers to MLS at all.

The downside to this, of course, is that agents and buyers have access only to one brokerage’s version of an off-market network since Bright MLS and NAR rules prohibit public promotion and advertising of these listings. It also has a significant skewing effect on home sale data.

So many sellers are taking advantage of off-market listing, a good number of sales are not being reported and included in data sets consumers and the industry use to calculate market activity and property values.

Area Comparisons

If It's Arlington, This Must Be The DVM

To further complicate things, media outlets persist in referring to the DC Metro Area (DCMA) as “DC.” This is not only inaccurate, but hugely confusing for those trying to game out real estate values in the District. For better or worse, it’s important to differentiate data for the District of Columbia from that of the DCMA/DVM.

The numbers in Arlington will typically differ (up or down) from those across the bridge in DC, as do home types and community attributes. If you compared data in either of those locations to that of, say, Baltimore MD, or Beckley WV, you’d see an extremely drastic difference. So including them in “Washington DC” data is really muddying the waters. Look at some of the descriptions and definitions of the “DMV” or “DVM” and “DCMA:”

Wikipedia: The Washington metropolitan area, also sometimes referred to as the National Capital Region or the DMV Area (named after District of Columbia, Maryland, and Virginia), is the metropolitan area centered on Washington, D.C. The metropolitan area includes all of Washington, D.C., and parts of Maryland, Virginia, and West Virginia.

Wikipedia: The National Capital Region portion of the Washington metropolitan area is also colloquially known by the abbreviation “DMV”, which stands for the “District of Columbia, Maryland, Virginia. The region is surrounded by Interstate 495 with the locations inside of it referred to as Inside the Beltway. Washington, D.C., which is at the center of the area, is sometimes referred to as the District because of its status as a federal district, which makes it not part of any state. The Virginian portion of the region is known as Northern Virginia. The Maryland portion of the region is sometimes called the Maryland-National Capital Region by local authorities but rarely by the general public.C. The metropolitan area includes all of Washington, D.C., and parts of Maryland, Virginia, and West Virginia.

Greater Greater Washington’s 2020 post adds layers of ambiguity.

Now try to define each media outlet’s geographical interpretation and reconcile property values in all these locations and come to a good understanding of what you should be paying for a home in Logan CIrcle, DC. Good luck! Even limiting the data to that of NVA, DC and close-in MD locations such as Hyattsville, Silver Spring, Chevy Chase and Bethesda is futile because the District is unique. Primarily urban (with a small smattering of urbanburbs), heavily saturated with historic, multifamily and attached dwellings that vary in value by quadrant, neighborhood and proximity to amenities such as Metro stations, while large portions of NVA and MD are suburban.

Here’s how Chatgpt put it:

“Housing in Washington, D.C., Northern Virginia, and Maryland can vary significantly in terms of cost, housing types, and availability. Here’s an overview of each region:

Washington, D.C.: Housing in Washington, D.C. tends to be relatively expensive compared to the surrounding areas. The city offers a mix of housing options, including apartments, townhouses, and single-family homes. The cost of living in popular neighborhoods like Georgetown, Dupont Circle, and Capitol Hill is generally higher, with high demand driving up prices. However, there are also more affordable neighborhoods available, particularly in the outskirts of the city.

Northern Virginia: Northern Virginia, which includes cities like Arlington, Alexandria, and Fairfax, offers a range of housing options. The area is known for its suburban communities, offering single-family homes, townhouses, and condos. Northern Virginia provides a good balance between urban amenities and a suburban lifestyle, making it popular for families and professionals. While housing costs in desirable neighborhoods close to D.C. can be high, there are more affordable options available in the region.

Maryland: Maryland offers a diverse range of housing options and is known for its mix of urban and suburban areas. Cities like Bethesda, Silver Spring, and Rockville provide a suburban feel with access to amenities, while Baltimore offers more urban living options. The state has a mix of single-family homes, townhouses, and apartments, with varying price ranges depending on the location. Maryland generally offers more affordable housing options compared to Washington, D.C., but prices can vary significantly based on home types, proximity to major cities and other factors.

Overall, housing prices tend to be highest in Washington, D.C., followed by Northern Virginia, while Maryland offers a broader range of affordability.”

Real estate is first about location (location, location). Data for DC should be clearly defined as being DIstrict-only and posts and articles on the DC real estate market should limit themselves to DC, not outlying areas.

National Indicators Ahead of the June FOMC Meeting

On Thursday, May 18, 2023, The Conference Board published its Leading Economic Index & Coincident Economic Index, reporting that the U.S. LEI declined again in April. The LEI provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term. The Coincident Economic Index provides an indication of the current state of the economy.

LEI for the U.S. declined 0.6% in April to 107.5, following a decline of 1.2% in March. The LEI is down 4.4% over the six-month period between October 2022 and April 2023—a steeper rate of decline than its 3.8% contraction over the previous six months (April–October 2022).

Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board:

 “The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook. Weaknesses among underlying components were widespread—but less so than in March’s reading, which resulted in a smaller decline. Only stock prices and manufacturers’ new orders for both capital and consumer goods improved in April. Importantly, the LEI continues to warn of an economic downturn this year. The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023.”

The Conference Board Coincident Economic Index® (CEI) for the U.S. increased by 0.3% in April 2023 to 110.2, after rising by 0.2% in March. The CEI is now up 0.7% over the six-month period between October 2022 and April 2023—down from the 0.9% growth it recorded over the previous six months. The CEI’s component indicators—payroll employment, personal income less transfer payments, manufacturing trade and sales, and industrial production—are included among the data used to determine recessions in the US. While recent trends in manufacturing activity and industrial production have been weak, employment and income growth remain positive.

If you’re focused on the Conference Board’s 2023 assessment, you’ll want to read on to their 2024 expectations:

Looking to 2024, we expect the volatility that dominated the US economy over the pandemic period to diminish. In the second half of the year 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.


We will stress again that buyers looking to capitalize on the slight softening of the DC market ahead of what these experts predict to be a robust 2024 market, should act now. Those able to pay cash for properties, and those able to qualify for mortgages should be entering the market this spring. Let’s not look back next year on another missed opportunity.

Rates: Nobody's Favorite Subject Right Now

Historically, November of 2020 was the low, at 2.65%. They're currently hovering just above the 7% mark.

Mortgage Rates Continue to Increase

On Tuesday, May 30, 2023, the average interest rate on a 30-year fixed-rate mortgage jumped 33 basis points to 7.276% APR, according to

The week ending May 25th, fixed rates reached their highest levels since early March 2023.

  • The 30-year fixed-rate mortgage averaged 6.82% APR, up 19 basis points from the previous week’s average.

  • The 15-year fixed-rate mortgage averaged 5.98% APR, up 29 basis points from the previous week’s average.

  • The 5-year adjustable-rate mortgage averaged 7.46% APR, up 23 basis points from the previous week’s average.

The 30-year fixed-rate, the most popular mortgage, averaged about 6.6% in April and about 6.7% so far this month, up about 1.5 percentage points compared with April and May of 2022.

While rates are higher this spring, national housing prices are generally flat compared with a year ago — up slightly in some regions and down in others.

The national median price for existing homes — those owned and occupied before going on sale — was $388,800 in April, 1.7% lower than a year ago, according to the National Association of Realtors. April was the third consecutive month that the NAR reported a slight year-over-year price decline, and February was the first month that the price had ebbed in over a decade.

Price trends vary by region, with 2.8% and 1.8% year-over-year gains in the Northeast and Midwest, respectively. In the South, the median price slid by less than 1%; in the West, the median price dropped 8% from April 2022. Despite that drop, the West remains the most expensive region, with the median price averaging $578,200 in April.

Although home prices aren’t skyrocketing, the market is still competitive for buyers due to a shortage of homes for sale. In April, there was a 2.9-month supply, meaning that it would take almost three months for all the homes to sell at the current pace. That’s a little better than the 2.6-month supply in March but still below the five- to six-month supply that’s considered a balanced market with plenty of buyers and homes for sale.

How Rates Are Affecting The Housing Market

Per NerdWallet, although home prices aren’t skyrocketing, the market is still competitive for buyers due to a shortage of homes for sale. In April, there was a 2.9-month supply, meaning that it would take almost three months for all the homes to sell at the current pace. That’s a little better than the 2.6-month supply in March but still below the five- to six-month supply that’s considered a balanced market with plenty of buyers and homes for sale.

Freddie Mac:reported on May 25 2023:  “The U.S. economy is showing continued resilience which, combined with debt ceiling concerns, led to higher mortgage rates this week. Dampened affordability remains an issue for interested homebuyers and homeowners seem unwilling to lose their low rate and put their home on the market. If this predicament continues to limit supply, it could open up an opportunity for builders to help address the country’s housing shortage.”

  • Higher home prices and elevated mortgage rates have slowed the national housing market.
  • The market for real estate investment trusts (REITs) has been even harder hit than the broader housing market.

About 14 million U.S. homeowners refinanced their mortgages between Q2 of 2020 and December 31, 2021 before the 2022 hike in mortgage rates began. Today’s significantly higher mortgage interest rates “leave homeowners somewhat disincentivized to sell or change properties” according to a recently-released report, which also states that owners looking to sell their existing home and purchase another property would “face increased borrowing costs and higher(home) prices.”

This, added to the number of Americans who purchased between 2017 and the end of 2021, is the primary reason for our current inventory deficiency that is exceeding demand and propping up housing prices.