Home sales in the D.C. region’s market have slowed this spring and summer, and so have annual price gains. While sales have slowed, prices are still rising, which could indicate buyers are still willing to pay list prices or close to them for homes on the market here.
But the metric that measures the median selling price of all properties being sold, including those in the upper 5% of price range, is defined as the luxury market. In the D.C. metro, that is homes priced at $1.8 million or more.
“The most active buyers in the market right now are higher-income buyers,” said Lisa Sturtevant, chief economist at listing service Bright MLS. “Because they are more active in the market, they are actually skewing that median sold price, making it look like the overall market is seeing price gains. But it is really about the middle of homes being sold.”
The luxury market has traditionally seen less competition from buyers, but Bright MLS noted a change in competition at the higher level starting in the second quarter of this year.
“The luxury market is still pretty competitive,” Sturtevant said. “Homes are selling more quickly than other homes in the overall market. And, as always, luxury sales are more likely to be cash sales. So right now, the luxury market is slowing, but it is still more resilient than the overall market.”
The annual median selling price gain in the overall D.C.-area market in the second quarter was 2.0%, compared to 2.3% in the luxury market.
Luxury buyers also need to ask quickly. The median days on market for those listings in the second quarter was just 11 days, with 25.1% of sales closing above list price.
The luxury market also appears to be more isolated from federal government spending and job cuts in the D.C. region than the overall market, though Sturtevant said that may change.
“The threshold for the luxury market is $1.8 million,” she said. “That is an expensive home. But it is also a home that people who work in the federal government could potentially afford to purchase. We are going to see more impact on the housing market from the federal government cuts this fall, and I think that could rise up into the luxury segment of the market.”
The definition of the luxury market may also need rethinking. Those entry-level luxury market prices no longer necessarily represent only wealthy buyers who may have no concern about how local economic changes affect them.
“I think we are going to have to do a better job at differentiating between luxury — those $1.8 million and $2 million homes that include a lot of suburban, single-family homes. We need to distinguish that luxury market from the upper end,” Sturtevant said. “Because I think we are going to see a divergence in how those two markets perform this fall as the federal layoffs and cuts have more of an impact on our local housing market.”
The D.C. region dominates the luxury market in the mid-Atlantic region, which Bright MLS listings cover. Five of the top 10 luxury market ZIP codes in the mid-Atlantic are here, including Dupont Circle’s 20007 in D.C., where 42% of second quarter sales were defined as luxury. In McLean, Virginia’s 22101, 38% of sales were luxury. ZIP codes in Bethesda, Arlington and Potomac all saw an outside share of total sales fall in the luxury category in the second quarter.
ZIP code 20007 also ranked No. 2 in the mid-Atlantic for sales in the “ultra luxury market,” with 19% of sales priced in the top 1%, topped only by 24% in Princeton, New Jersey.
All-cash sales accounted for one-third of all luxury sales in the second quarter. In the mid-Atlantic, the top all-cash market was Maryland’s Eastern Shore, where more than half of luxury properties are purchased with cash.
The highest-priced sale in the D.C. region in the second quarter was a riverfront estate that sold for $14.05 million.
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