Question: How did the DC area market perform last year?
Answer: Most of the DC area housing market put forth a strong performance in 2024, which meant good times for sellers and harder time for buyers. One of the few exceptions was the Washington DC condo market, which saw lower demand, increasing inventory, and downward pricing pressure.
DC Area Appreciation Almost Double National Appreciation
The average sold price of homes in the Greater DC Area increased by 6.7% in 2024, compared to the National average of 3.8% (lower by some sources), led by another year of strong price growth of detached single-family homes.
Over the past ten years, homes in the Greater DC Area have appreciated by an average of 4.6% with the last annual decrease coming in 2009.
Historically Low Numbers of Homes Traded Hands
Fewer homes have traded handed in the past two years than any other 24-month period in the last thirty years, despite the population and housing supply increasing significantly during that period. The number of homes sold in 2023 and 2024 are 24% and 22% lower than the ten-year average from 2013-2022.
Low Sales Volume is a Supply Problem, Not a Lack of Demand
One may reasonably assume that high interest rates and high prices are the root cause of historically low sales transactions, but, in most cases, buyers are quickly absorbing what inventory is made available for sale and the problem is a lack of inventory being offered for sale. If demand was the problem, we wouldn’t see average prices increasing 6-7%.
Just look at the difference in the chart below between monthly new listings in 2019 compared to 2023/2024, we’re down roughly 40%.
That Could Change in 2025
With job changes (return to office) and expanding families, there’s only so long homeowners can hang on to their pandemic-era interest rates before cashing in on their equity and trading it for a different home and higher monthly payment. We could see some of that pressure start to spill into the 2025 housing market with more listings.
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Nearly one in five homeowners are considering selling within the next 12 months and the most likely sellers are recent, younger buyers, not Baby Boomers
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32.2% of homeowners planning to sell in 2025 have owned their homes for less than 5 years
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Recent buyers benefited from low mortgage rates and rising home prices, enabling faster equity growth and move-up opportunities, and will pay little or no capital gains tax on their profit due to the $250k/$500k gains exclusion on a primary residence
We closed out 2024 with a third consecutive quarter of year-over-year quarterly increases in new listing volume after ten consecutive quarters of year-over-year decreases. This is a positive signal for supply levels in 2025.
Most Forecast Moderate Price Growth Nationally
All six major real estate forecasting organizations are forecasting moderate growth for the nation’s home values, ranging from 2% to 4%, averaging just under 3%. By comparison, these same six organizations forecasted an average increase of .82% in 2024, ranging in forecasts from -1.7% (Realtor.com) to 2.5% (CoreLogic), and three forecasting price decreases in 2024.
VS.
Virginia Dominates Net Migration in the DMV
Virginia has long dominated the DMV in net migration and continues to be an economic powerhouse for the region.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
