Trying to buy a home in the D.C. area when competing with other buyers, and for fewer listings, isn’t just a challenge for entry-level buyers. The competition at the higher-end, million-dollar-plus listings is sometimes even more fierce.
“Some of these are getting eight, 12, 16 offers. And all of these offers don’t have any contingencies,” said Corey Burr at Sotheby’s International’s Chevy Chase, Maryland, office, whose clients are mostly in the seven-figure market.
When prices are that high to start, the bidding wars are amplified — sometimes to the extreme.
“There was a property that recently sold in American University Park in Northwest D.C. that was listed for $1,850,000, and it just settled for $2,650,000. A townhouse in Spring Valley, also in Northwest D.C., was on the market for $1.4 million, and it sold for $250,000 more than asking price,” Burr said.
“In Westmoreland Hills, in Montgomery County just across the D.C. line, a home was on the market for $1.8 million and it sold for over $2 million.”
In January, 17% of the inventory for total homes for sale in the D.C. metro was priced at more than $1 million, according to Long & Foster data. And of 5.9% of the million-dollar-plus homes were priced between $2 million and $5 million.
In January, 529 homes priced at more than $1 million went under contract in the D.C. area.
Those high-end listings are shrinking along with inventory across the board. Million-dollar-plus listings in the D.C. region in January were 36.8% lower than a year earlier, and 48.6% lower compared to two years earlier, Long & Foster’s LuxInsight report shows.
Burr, whose been in the real estate market in Washington for 35 years, recalls only two other times he’s seen the market, in all price ranges, as it is now. One was in 1989, and the other was 2005 to 2006. In both cases, there was incredible demand and very little inventory.
Eventually, those markets cooled because the dynamic of demand outpacing supply ran its course and the cost of borrowing became too expensive, he said.
Those two could play out soon again. Burr said that if mortgage rates get into the 5% to 6% range, sales will slow. And he expects inventory to increase this summer.