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The Spring 2024 DC Market Forecast

By
Real Estate Agent with Compass | 1313 14th St NW DC 20005 Licensed in DC & VA

Real Estate In The District

The Washington DC Spring 2024 Market You Didn't Expect

February 25, 2024

Why Are Interest Rates Going Up Instead Of Down?

The spring 2024 Washington DC real estate season is off to a slow start as interest rates top 7%. Industry blog posts trumpeting a return to the competitive pre-2023 market in the District were clearly written before mid-February, when the PPI (Producer Price Index) report release revealed a +0.3% increase when economists were expecting only a 0.1% rise. Monthly PPI reports are an inflation indicator. Core CPI increased by 0.5%, also much higher than forecasted. It was the second consecutive surprise CPI report showing an upward trajectory of inflation. The 10 year treasury yield rose to 4.28%, and the 30 year mortgage rate spiked to 7.2%.

The Fed maintains that its policy on rate cuts will be informed by data. With February inflation indicators in mind, traders have rewritten forecasts for 2024’s first rate reduction, which is now projected to take place in June rather than March.
 
This could still turn around before the March Fed meeting March 19th and 20th, but as of today, the CME Fed Watch Tool shows a 97.5% chance the Fed will hold rates. Some pundits are predicting another quarter point rate increase.

This had an immediate impact on the Dow Jones Industrial Average, which dropped 525 points. The average rate for 30-year fixed mortgages then rose to 7.14%, according to Mortgage News Daily, and loan applications fell 2.3%, the Mortgage Bankers Association reported.

Where We Are Now

With the Fed holding fast to its 2% inflation goal and rates back up over the mid-6's, the Washington DC real estate market is stuck in the same holding pattern that brought activity to a halt in late 2023.

Homeowners need to see a significant drop in rates before giving up their historically low mortgage rates. Nationally, over 40% of homeowners don't have a mortgage at all, and a a majority of those who do refinanced when rates dropped to record lows from 2020 to 2022. In the District of Columbia, where real estate prices are high, there's little incentive for those homeowners to enter the selling market.

Finding A Win

Because there are always moves necessitated by job and life changes, we will still see new listings come on market, but with pent-up demand, competition may erase many benefits buyers might have seen from challenging market conditions. The best course for home buyers who can't wait out the Fed, is to utilize alternative financing programs and refinance in 2025, or pay cash.

Read more at realestateinthedistrict.com

 
Posted by

Susan Isaacs, Realtor

The Isaacs Team LLC

Partnering With DOMO

Compass

1313 14th Street NW DC 20005

Find us at:

realestateinthedistrict.com

Equal Housing Opportunity

Copyright - All rights reserved The Isaacs Team LLC

Comments (5)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Enjoyed your blog page, and I added you as a follower. I would love the follow back. Also, then we both get 50 points. Bill

Bill Salvatore, Realtor- Arizona Elite Properties

Feb 26, 2024 05:59 AM
Roy Kelley
Retired - Gaithersburg, MD

This is a good report to share with prospective home buyers.

Have a productive week.

Feb 26, 2024 06:40 AM
Jim Crawford
Long & Foster - Fredericksburg, VA
Jim Crawford Broker Associate Fredericksburg VA

Thank you for taking the time to put this report together.  It's most informative and perfect for buyers and sellers who need this type of information to make informed decisions. I hope you have a wonderful and productive week!

Feb 26, 2024 07:41 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Susan and thank you for the information on the market in this report.  Hope you are having a great start of the week.

 

Feb 26, 2024 10:32 AM