While the DC Metro area typically sees a slight drop in activity over the summer months, low inventory is extending search time for buyers who started looking during the spring market. We’re seeing fewer homes available and fewer closings. Still, in many pockets of our area we continue to see competition due to the lack of inventory.
Year to date, homes are sitting on the market an average of 23 days, up from 17 this time a year ago. The average sold price in our area is just barely under $700,000 with sale to list price ratio at 100%, meaning buyers can expect to pay right around list price.
Focusing in on July 2023 monthly data, average days on market is 17, up just a tad from 16 in July 2022. Average sold price in July came in at $717, 857, up more than 5% from July 2023.
Luxury condos are in demand among buyers. So far this year, condo prices are up 2.71% compared to 2022. There's 3.4 months of supply in this sector - more than other types of housing - which is keeping the price increases in check and below the average home price increase for all sectors. Luxury single-family homes are the second most popular category among buyers, indicating that mid-market and entry-level buyers are facing more affordability challenges as mortgage rates remain high and demand outpaces supply at those price points.
As far as affordability goes, we’re in a bit of a Catch-22 scenario. Salaries, while increasing, aren’t increasing at the same rate as the cost of housing. Plus, we’re still battling inflation and a thriving labor market is one of the main factors holding us back from meeting the Fed’s goal of limiting price increases to 2% year-over-year.
Inflation data shows GDP is growing. Consumers are still willing to spend money on durable goods and housing; this leads to a demand for workers, a need for wage increases, and lower unemployment rates. In an attempt to combat increasing prices, the Fed Funds Rate went up another 0.25% in July.
With the threat of inflation still looming, mortgage rates continue to hold above 7% and those mid-to-entry-level buyers are forced to look for more creative ways to finance, including assumable mortgages, seller financing, and gifts from their parents. (Questions on any of these topics? Please reach out; I’m happy to share more!)
We’ll continue to monitor market activity, affordability, inflation, and mortgage rates as we move into the fall.