Heading into the spring housing market with soaring mortgage rates and near-record high prices, D.C.-area real estate agents were expecting a further slowdown in potential buyer activity and a modest price correction.
Neither has happened, at least not to the degree many had anticipated.
There are two pieces of the puzzle: Supply and demand. There is a continued lack of sellers, and hopes that more sellers would return to the D.C.-area market this spring and summer have faded.
Bright MLS, a multiple listing service, surveyed 1,900 agent members between May 5 and May 10. The survey found more than 54% expect seller activity to be “low to very low” between now and August. Those same agents expect buyer demand to remain stronger than seller activity, however, with 47% expecting buyer activity to be “high to very high” in the next three months.
Home sales have slowed significantly from a year ago, but almost entirely because of a lack of inventory, not a lack of buyers. High mortgage rates have not deterred many buyers.
“I think we’re all a little surprised that the market hasn’t slowed more than it has,” said Lisa Sturtevant, chief economist with Bright MLS. “More first-time buyers are priced out, but there are a lot of existing homeowners who have a lot of equity built up in their home, and they are able to roll that into another home purchase, and in essence, sort of buy down that higher mortgage.”
Those buyers are competing with others for what is on the market. For those selling, competing bids on a fairly-priced home are still very common.
“It’s incredible, isn’t it?” Sturtevant said. “We sort of thought after the frenzy of the pandemic the market would slow down and we’d be back to sort of one home, one offer. Sellers are getting multiple offers still, and it is because there are buyers out there still competing over very little inventory.”
Median selling prices in the D.C.-metro area have declined modestly for two consecutive months, but they remain higher than they were a year ago, and, because of current market conditions, selling prices are likely to remain strong this year, Sturtevant said.
“We really do see that low inventory in the Washington area is probably going to keep any further price drops to a minimum,” she said. “Real estate agents in our market are still seeing lots of offers over list.”
In Northern Virginia for example, closed sales in April were down 33.6% from a year ago, but the median selling price was up 0.7% to $690,000.
“What we see is consistent with recent trends over the past few months. There are fewer sales happening now than this time last year, but home prices have held steady,” said Ryan McLaughlin, CEO of the Northern Virginia Association of Realtors.
First-time buyers do remain active in the Mid-Atlantic region, with 46.1% of buyers who closed in April buying their first home. And Bright MLS said the share of first-time buyers in our region continues to be higher than the rest of the nation, perhaps due to relative affordability between prices and household incomes.
