The Fed Created a DC Home Buyers Market, Then Priced Non-Cash Buyers Out
As mortgage interest rates inflated, the DC market slowed, offering buyers a rare opportunity... but they quickly found that higher rates meant tighter lending conditions and huge payment hikes. With the Fed repeatedly dismissing hopes of meaningful 2024 rate reductions, many buyers sat out the one opportunity they may have had to purchase in the District without mad bidding wars, price escalations and harsh terms.
The Numbers Told A Different Story
Total sold dollar volume for 2023 shows a significant contraction, declining by 22.19% to $5.33 billion from 2022’s $6,847,085,812. The number of units sold saw a substantial drop of 21.97%. The median sold price, a key indicator of market health, experienced a more pronounced decrease, falling by 3.96% to $630,000.
Data spanning from January 2023 to November 2023 creates the narrative of a buyer’s market, but the reality was quite different. It was a ‘buyer’s market’ only for those flush with cash, or able to shoulder the risk of a lack of refinance options the following year.
The Story Numbers Don't Tell
The real opportunities in the DC market this year were not those typically reflected in data; they were the market conditions in which buyers found comfort and sanity. Buyers experienced a greater number of choices with increased inventory (supply rose +53.2% in Q1 over 2022), fewer bidding wars, the opportunity to include important contract terms such as inspection and financing contingencies and 30 day closing cycles (as opposed to the more typical 2-3 week cycles), and the longer Days On Market (average DOM increased by 16.67% to 35 days) allowed enough time to think over a significant purchase rather than being forced into a quick decision by offer deadlines.
Property Types and Financing Trends
Breaking down the data by property types, attached homes fared slightly better than their detached counterparts, experiencing a 0.56% decrease in average sold prices compared to a more significant 5.54% decline for detached homes. In DC, we know that this is at least partially attributable to three factors;
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