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Washington, D.C. Real Estate Market

Wednesday - March 18, 2015

Washington D.C. continues to make impressive strides in regards to its local real estate market. Both closed sales and pending sales in the Washington D.C. real estate market continue to be above their 2010, 2011 and 2012 levels. The number of homes for sale, as a result, continues to increase. Active listings reached their highest August-level in three years, but are only 43.1% of their peak-level. For all intents and purposes, real estate investors should continue to focus their attention on the local market.

After months of low inventory, homes are steadily coming on the market. The number of homes for sale last month increased to 11,199; up from 8,391 in July 2013 and the highest level for any month in nearly three years. Yet, despite 10 consecutive months of year-over-year increases, active listings are 56.8 percent below the 2007 peak. New listings increased from last year, marking the sixth month of year-over-year increases.

Despite the way things have transpired in Washington, the real estate market has been able to recover from a period of post-recession price weakness, due in large part to strengthening values. However, while trending up, expectations need to be tempered. While prices are up, the rate in which they are appreciating is beginning to slow. Zillow forecasts that homes in the Washington area should increase by as much as 0.5% over the course of a year. Of course, at a half of a percentage point, home prices are still predicted to appreciate slower than the rest of the country.

Price increases have removed Washington homes from the doldrums of the recession, as the current median home price for the region is now $403,600. The current value represents a modest 0.1% increase in the last year. However, over the course of three years, home values in Washington have increased 18.4%. Over that same period, homeowners have gained an average of $62,700 in equity – nearly $20,000 more than the rest of the country. Popular neighborhoods leading the Washington area include: Dupont Circle and Georgetown, with average listing prices of $584,159 and $2,137,209 respectively.

It is important to take note of price appreciation and principle payments in the Washington area. In the last three years, these indicators have boosted total equity growth. In order to illustrate the amount of equity Washington homeowners have accumulated since the recession, we have broken it down as follows:

• Homeowners that purchased in Washington one year ago accumulated an average of $7,413 in equity.
• Homeowners that purchased in Washington three years ago accumulated an average of $78,070 in equity. That is nearly $30,000 more than the rest of the country.
• Homeowners that purchased in Washington five years ago accumulated an average of $108,184 in equity – more than twice as much as the rest of the country.

Like its nearby neighbor Richmond. Washington s job sector continues to be one of the main drivers of local supply and demand. With a huge population of government workers and business services, Washington will continue to be a hub for employment. In fact, employment has held up and is on an upward trend. The current unemployment rate in Washington is 5.3% better than the national average of 6.1%.

Foreclosures will be a factor impacting home values in the next several years. In the metro area, 2.5 out of every 10,000 homes have entered into the foreclosure process. This is greater than the Washington DC value of 0.8 and also lower than the national value of 4.3. The percent of delinquent mortgages in Washington Metro is 8.1%, which is higher than the national value of 6.9%.

Washington, D.C. Market Summary:

• Current Median Home Price: $403,600
• 1-Year Appreciation Rate: 0.1%
• 3-Year Appreciation Rate: 18.4%
• Unemployment Rate: $6.0
• 1-Year Job Growth Rate: 0.9%
• Population: 646,449
• Average Days On Market: 22
• Percent Of Underwater Homes: 19.3%
• Median Income: $88,233

Washington, D.C. Housing Market Q1 Update:

As we get farther into the new year, sales have showed signs of life.  It would appear as if confidence is returning to the local market and sales have picked up.  According to RealEstate Business Intelligence (RBI), there were nearly 300 more homes sold at the beginning of this year than last, which represents an increase of eight percent.

Pending home sales also offer some encouraging insight as to the direction of the Washington D.C. housing market in 2015.  As recently as December, pending home sales increased 11 percent year-over-year.  The gain represents the only increase in pending sales since November of 2013.  For all intents and purposes, the increase in pending home sales will bolster the market s numbers in 2015.  Some experts attribute the increase to higher inventory levels.  With the addition of more homes on the market, it is only natural that sales would rise.

According to the Washington Post, there were 8,267 active listings at the end of December, 19.1 percent more than December 2013. New listings grew by 331 listings, a nearly 13 percent increase compared to December 2013.

The Washington D.C. real estate market has made steady gains just a few short months into 2015. Seeing as how well Washington has done in what is typically a slow time of the year, economist remain optimistic.

“This likely means sales activity could exceed the 2014 levels in the spring,” said Corey Hart, RBI’s senior product manager. “We’re not predicting astronomical gains, but steady gains. Seeing contract activity pick up 11 percent in December and 6 percent in January is a leading indicator that sales activity into February and into March will be healthy increases.”

Washington, D.C. Real Estate Statistics:

Washington D.C. County Map: