D.C.-area home prices plunged 33% between 2007 and 2010, according to listing service Bright MLS, but that Great Recession setback has barely put a dent in long-term homes price inflation in the D.C. region.
Going back more than two decades shows home values in the D.C. metro have more than tripled.
“In 2000, the typical home price in D.C. was $173,207, and now it costs $521,308. Overall inflation since 2000 has increased by 145%, whereas home prices in D.C. have increased by 201%,” said Sam Huisache at homebuyer resource site Clever.
The national average for home-price inflation over that 23-year period is a bit more than D.C., at 207%.
Home price inflation far outpacing overall inflation by that much is good for long-term homeowners, but it has just added to affordability challenges for buyers.
“Most people’s income has not increased by 201% since 2000. So there is a huge gap between income and home prices,” Huisache said.
Home prices have cooled in many metro areas in the past year — the D.C. metro included — and, for now, that is putting the brakes on home price inflation.
“Home sales have declined just because people can’t afford to buy homes. And as a result, home price inflation itself is starting to slow down,” Huisache said.
Nationally, Clever’s research shows a more recent reflection of home prices relative to inflation. For comparison, $100,000 spent on a home in January 2020 would equate to spending $142,249 today, while $100,000 spent on goods and services in 2020 would equate to $113,740 today.
To compare the current housing market to previous generations, Clever’s report assumes that home prices grew at the same rate of overall inflation since 1970 instead of faster than overall inflation. That would mean today the median home sale in the U.S. nationally would be just $189,527, instead of $468,000.
Clever’s full report on historical home price inflation and more recent trends is online at the Home Bay site, which Clever owns.
Below is a chart of historical D.C. metro median selling prices leading up to the Great Recession, courtesy of Bright MLS.
