7% mortgage rates? For some DC-area buyers, it doesn’t really matter

Potential homebuyers in the D.C. region continue to face the headwinds trifecta of rising prices, very few for sale, and the highest mortgage rates in more than two decades. But for some buyers, those eye-popping mortgage rates don’t matter.

One group of buyers is obvious.

“Seven percent rates are not a factor for buyers who are paying in cash. And not for sellers using proceeds from a previous sale to cover their purchase transaction,” said Erica Plemmons, senior economist at mid-Atlantic listing service Bright MLS.

For the rest of the potential buyer pool — first-time buyers and move-up buyers not coming to the table with a lot of equity from their previous sale — the near-term market does not show signs of moving more in their favor.

Bright MLS recently released results of a survey of more than 1,400 of its real estate agent members, and those boots-on-the-ground real estate agents see slow sales persisting.

Nearly a third of agents said they expect the level of buyer activity to be “low or very low” over the next three months, up 10% from a similar survey just one month ago — with 44% saying they anticipate “average buyer activity.” Those same agents are more bearish when it comes to new listing activity — with 65% anticipating “low or very low” seller activity across the mid-Atlantic region.

Many potential buyers are now taking a wait-and-see approach, but Plemmons said it may be a long wait.

“There will not be some kind of major relief in either supply, interest rates or prices in the near-term that would make someone who would maybe wait six months or a year considerably more favorable than someone who is buying today,” she said.

The squeeze right now is almost entirely on first-time buyers.

“First-time buyers are more likely to submit five or more offers to finally win a home. So those who are first-time buyers really need to be persistent,” Plemmons said.

Bright MLS’ agent survey found 42% of move-up buyers are successful in buying the first home they make an offer on, compared to just 30% of first-time buyers.

Bright MLS sees some break in the logjam in 2024. Many of the agents surveyed said they believe 2024 will bring both more buyers and sellers.

Visit the Bright MLS website to read the full agent survey “Hibernation Ahead for Mid-Atlantic.”

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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