The D.C. area’s spring housing market is in the rear view mirror, with the traditionally slower summer house hunting season underway. The spring market turned out to be better than real estate agents, potential buyers and sellers feared it would be.
“This spring market was unexpectedly spectacular. We were not expecting it. What happened very quickly is that demand showed up, even with the 6% range for 30-year mortgages,” said Corey Burr at The Burr Group with TTR Sotheby’s in Chevy Chase, Maryland.
Mortgage rates remain stubbornly high, and that 6% range is now hovering close to the 7% range. While buyer demand in the D.C. region still remains strong, Burr said there would be a tipping point.
“I think that if the 30-year fix gets over 8%, we are going to be facing a very tight market, I think that sellers would just not list their properties, and buyers would find it way too expensive,” he said.
Just one in 10 homeowners with a mortgage currently have an interest rate that is 6% or higher. Many homeowners have one that is considerably less. The average rate for a 30-year fix fell below 3% in late-2020 and remained in the low-3% range through the end of 2021. It began to rise again, sharply in early-2022.
For those homeowners with rates who don’t need to sell, there is little incentive to give up their historically low rates. That lack of inventory is the market’s single-biggest problem, behind high rates.
There are always owners who need to sell, and more buyers are competing for those properties.
“The sellers we are seeing right now are those who really need to sell for one reason or another. Older owners for example may be downsizing, people getting job relocations, and also those with major life changes (such as) getting married or a death in the family,” Burr said.
The number of homes currently for sale in the D.C. metro is down 25% from this time last year.
