The Washington, D.C. metro area real estate market is experiencing a period of adjustment. High prices, rising inventory, and fluctuating mortgage rates are all shaping the landscape in ways we haven’t seen since the pandemic. But for buyers who are ready and able to take advantage of this window, there are opportunities—more inventory, slower sales, and the potential for better negotiating terms.
A Quiet August: Slowest Sales Since 2008
It’s been a minute since we saw an August this slow—4,351 homes sold across the DC metro area, marking a 5.1% drop from August 2023. Not only that, but this was the lowest August sales total we’ve seen in 16 years. Yes, you read that right—2008 was the last time we saw sales this sluggish during the late summer months.
What's driving this trend? A combination of factors: High home prices, rising inventory, and fluctuating mortgage rates. So, if it feels like the market is hitting the brakes, you're not wrong.
Home Prices Keep Rising
Despite slower sales, home prices are still on the up and up. The median price in August was $612,000, reflecting a 4.6% increase year-over-year. So, while some buyers are waiting for prices to cool off, others are jumping in before they rise any further.
Taking Time to Decide: Days on Market Creep Up
One silver lining for those still actively shopping? Buyers are getting a little more breathing room. In August, homes spent a median of 10 days on the market, compared to just 8 days in July and August 2023. More inventory and slightly less competition means buyers have a little extra time to decide on their next move.
But don’t get too comfortable! The market is still competitive, and properties in sought-after neighborhoods or lower price points are moving quickly. Depending on your location and price range, it could still be a race to lock in that perfect property.
Rising Inventory: A Double-Edged Sword
Here’s where things get really interesting. Inventory is up 25.5% from where we stood at the end of August 2023, and we've now seen seven consecutive months of rising supply. However, new listings were down 1.2%, which means the inventory growth is largely due to slower sales, not necessarily an influx of new homes hitting the market.
So, what does this mean for buyers? More options, for one. There’s less urgency to submit an offer the moment you walk through the door. But, while inventory is rising, it’s still historically low. To put it in perspective, overall inventory is still less than 60% of what it was in 2019. So yes, you have more choices than you did a year ago, but it’s not exactly a buyer’s paradise just yet.
Mortgage Rates: A Rollercoaster with No End in Sight
Mortgage rates have been trending down since early July, but here’s the kicker—they haven’t dropped enough to meaningfully improve affordability in the D.C. region. The Federal Reserve did finally cut interest rates by half a point, more than many experts expected. But as with all things, the anticipation was arguably bigger news than the cut itself.
Rates are at their lowest point in 18 months, but don’t get too comfortable. Experts, like Zillow’s Senior Economist Orphe Divounguy, warn that we may not see much more downward movement. In fact, there's always the chance rates could creep back up.
If you’re planning to wait it out for a significant rate drop, that could be a gamble.A big dip seems unlikely in the current economic climate. If you find a home you love and the numbers make sense, waiting could carry more risk than reward.
More Bargaining Power for Buyers
According to Bright MLS Chief Economist Dr. Lisa Sturtevant, “Buyers are taking advantage of more inventory to be choosier and to take more time deciding on a home. However, the market is still competitive and, depending on the price point and location, buyers still need to be prepared to act quickly.”
If you're in the market, don’t be afraid to ask for concessions, especially as we move deeper into the fall and inventory continues to build. Sellers are feeling the pinch and may be more willing to accommodate your requests.
What’s Next: Looking Forward to Fall 2024
Looking ahead, the dynamics of the market could shift further in favor of buyers. Mortgage rates are expected to continue their gradual decline, but these small drops are unlikely to offset the still-high home prices in many parts of the metro area. Inventory will likely keep rising, meaning more options for buyers, but sellers will also need to adjust their expectations.
In the months ahead, you can expect:
More homes on the market: As inventory continues to increase, buyers will have more options, but competition may still be fierce in certain areas.
Slightly lower mortgage rates: While rates are unlikely to fall significantly, the gradual decline should help more buyers re-enter the market.
Seasonal price adjustments: Home prices typically soften in the fall, so keep an eye out for potential deals, especially if you're open to negotiating.
Sellers making concessions: With more inventory and homes taking longer to sell, sellers may need to be more flexible on price, contingencies, and concessions.
Whether you’re buying or selling, staying informed and being prepared to adapt to changing conditions will be key. Keep an eye on those mortgage rates, watch the inventory levels, and make your move when the time feels right.🏡✨
Give me a call today to talk more about data in your specific area, and to create a strategic plan that meets your needs.
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