Question: Have you noticed more price reductions on homes than usual for this time of year?
Answer: Across the country, the number of homes with price reductions is on the rise. Zillow recently reported that nearly one in four homes listed on its website had a price cut in April. The markets seeing the highest rate of price cuts tend to be markets that saw the most significant appreciation during the COVID era housing boom like Phoenix, Tampa, Nashville, and Salt Lake City.
Price Cuts Increasing Across the DMV
The chart below shows the number of price cuts per month in the DC area. On one hand, it’s alarming to see the sharp increase in price cuts this year compared to previous years – it’s an accurate reflection of how the market has shifted this year. On the other hand, the first six months of the last three years (’22-’24) have been exceptionally strong markets that can make a normal market appear weak in comparison.
What Does the Summer Hold?
If you look at the pattern of price reductions through May compared to previous years and look at the seasonal pattern of higher rates of price reductions from June through October, one can easily forecast a significant rate of price reductions in the DMV on the horizon.
That may very well be our future, but it’s also possible that we’ve seen sellers in the DMV cutting prices faster than usual this year because of the onslaught of news about federal workforce and spending cuts. This could mean that spending cuts have been more front-loaded than usual, and the rate of price reductions may slow down (but will remain higher than previous years).
Will Seller Optimism Drop?
So far, sellers in Northern VA and the DC Metro have been optimistic going to market, with the average asking price of new listings up 1-4% year-over-year each of the last three months, per the chart below.
The chart below shows that some of those sellers have been rewarded for their optimism, with the average price of homes under contract with an asking price 1-5% more year-over-year (TBD what these properties actually sell for, but likely close to asking price).
On the flip side, the chart below shows us that many sellers are being punished for being overly optimistic, with the average list price of homes sitting on the market in April down 7% and 12% in the DC Metro and Northern VA, respectively.
If sellers become less optimistic and start going to market with lower asking prices, that may lead to fewer price reductions through the summer.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
Upcoming (pre-market) ERG Listings, Details and Additional Listings Available by Request
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Reston – 4BR/3.5BA/3,000 sqft – End-unit townhouse (1993) – Hollow Timber Ct Reston VA 20194
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Highland Park/Overlee Knolls – 6BR/5.5BA/5,000+ sqft – Detached Single Family (2025) – 22nd Rd N Arlington VA 22205
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Rosslyn – 3BR/2.5A/2,400 sqft – Condo (2022) – 1781 N Pierce St Arlington VA 22209
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Arlington Ridge/Aurora Hills – 3BR/2.5BA/2,450sqft – Detached Single Family (1961) – S Grove St Arlington VA 22202
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Tara Leeway Heights – 7BR/7.2BA/8,000sqft/half acre/pool – Detached Single Family (2026) - 1500 N Harrison St Arlington VA 22205
