The highest mortgage rates in more than two decades, an ongoing shortage of homes for sale and rising home sale prices, challenged buyers in the D.C. housing market in 2023.
But despite the headwinds, real estate agents looking back on last year will tell you it was still a pretty good year for the local market.
“Frankly, the biggest surprise of 2023 was the strength of the market. The interest rates got so bad so quickly that this two-year increase in interest rates wreaked havoc on our market. But the fact that the market stayed strong and prices were up last year is simply amazing,” said Corey Burr, senior vice president at TTR Sotheby’s International in Friendship Heights.
December data has not yet been finalized, but as of November, the median selling price in the D.C metro area had an annual gain of almost 6%, according to listing service Bright MLS.
Burr believes 2024 will bring more relief for buyers, and prices for sellers that will likely at least hold steady.
“We’re going to have an increase in sales. There is going to be an increase in inventory with more owners seeing it as a good time to sell,” he said. “And I think we are going to have, not a big price appreciation, but frankly, if we could just go flat to low single-digit increases like we did in 2023, I would call it a successful year.”
There were already some signs of an easing of the market for buyers as 2023 wound down. At the end of November, there was a 1.5 months supply of homes for sale — still tight, but a 14.5% improvement compared to a year earlier, according to Bright MLS.
There was one other surprise on the mortgage rate front that took most by surprise last fall.
“October 19 was a terrible date for interest rates as we hit 8% on the 30-year fixed mortgage and the 10-year Treasury yield touched 5%. But in nine short weeks, the 30-year fix has dropped from 8% to 6.5%, and the 10-year Treasury is down to 4%. These are massive moves in a very short period of time, and it is going to bode well for the housing market in 2024,” Burr said.
The 10-year Treasury yield is a better bellwether for predicting where mortgage rates are heading, as they tend to follow those yield movements and not Federal Reserve funds rates.
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