An earlier version of the graphic with this article misidentified two Zip codes. Zip code 20815 was identified as Bethesda; it is Chevy Chase's Zip Code. Zip code 20816 is for Bethesda, not Chevy Chase. The story has been updated.
A year ago, when the pandemic was about a month old, concerns bubbled up that the Washington-area housing market might be headed for a repeat of the 2008 crash. With the economy skidded to a halt because of shutdowns, would foreclosures mount as homeowners failed to pay their mortgages? Would housing prices tank? Would sales grind to a standstill?
Instead, the D.C. region’s housing market had another strong year, especially considering what happened in other parts of the country. To be sure, renters have been more impacted than homeowners. And homeowners, who have watched their equity rise, have fared better than home seekers who have faced bidding wars and escalating prices.
Sales slowed, but that was as much to do with low inventory as the pandemic. Demand continues to outpace supply, particularly after many of us spent the past year hunkered down at home. Our homes became more than the place we eat and sleep but also where we work, learn and recreate.
After staring at the same four walls for months on end, some homeowners decided it was time for a change. Because their lack of a commute made them less tethered to certain areas, they ventured farther away from their offices and suburbs saw a boost in sales. But no matter where they looked for a home, buyers were frustrated by the scarcity of homes for sale and stiff competition for those homes. It didn’t help that sellers were reluctant to put their homes on the market because they worried about strangers visiting during a pandemic.
“We’ve three factors that really drove the market, one being interest rates being at record [lows] and sliding down through most of the year, which makes affordability good for homeowners,” said Gunnar Blix, a data analyst at Black Knight, a mortgage and real estate technology and data provider. “We’ve also, on the other hand, seen low inventories. People aren’t selling that many homes, so that’s been putting pressure on sales, which pushes prices typically up. And then of course the third factor being the pandemic, which started in March, which shifted very much what people were looking for.”
In general, the D.C. region saw sales decline and prices gain but a couple areas were outliers, according to data provided by Black Knight.
“There were a few places where there were interesting things, Fairfax being the only one of the counties that didn’t see a big decline in sales to speak of and prices there really going up 7, 8 percent, which is a healthy clip but not extreme,” Blix said.
Sales of single-family houses in Fairfax County rose to 9,555 last year from 9,108 in 2019 and the median sales price of those homes went up to $730,000 from $675,000.
The number of homes sold fell across the region, with a few exceptions. Sales of single-family houses in the District dropped to 3,816 last year from 5,192 in 2019. Condo sales slipped to 3,415 from 4,075.
Sales of single-family houses in the Maryland suburbs fell to 30,039 from 34,586. Condo sales went down to 17,574 from 21,847. Sales of single-family houses in the Virginia suburbs decreased to 24,607 from 25,092. Condo sales slid to 21,602 from 22,579.
“What we’ve seen everywhere and in D.C. as well, is it’s like a push out to the suburbs in terms of where people want to live because they now aren’t as tied to the commute,” Blix said. “But even so, the District itself is holding up very well, particularly the single-family side of it.”
Lovettsville and Catharpin in Virginia and North Beach, Md., bucked the trend and saw their sales and prices rise significantly in 2020, when the figures are broken out by Zip code.
Lovettsville (Zip code 20180) in Loudoun County saw its sales go up to 214 from 149 in 2019 and its median price rise to $530,000 last year from $500,000 in 2019. Catharpin (20143) in Prince William County saw its sales go up to 18 from 12 and its median price rise to $760,000 from $534,900.
North Beach (20714) in Anne Arundel County saw its sales improve to 28 from 18 and its median price rise to $413,000 from $335,000.
“There’s also been a push [by] some people moving further away and, in some cases, moving across the country or picking up a second property in a place that’s not even all that close to the city,” Blix said. “I think there are several markets further away from the city that have benefited from this trend as well in terms of being second homes and maybe long commutes but maybe some of those [buyers] are still holding on to what they have in the city, thinking that they will come back eventually.”
Affordability continues to be a challenge as just about every jurisdiction hit an all-time high in median sales prices (not adjusted for inflation) in 2020, according to sales data from Bright MLS, the area’s multiple listing service. The median price of homes sold in Alexandria, Va., rose to $600,000; in Arlington County to $670,000; in D.C. to $630,000; in Falls Church, Va., to $815,000; in Fairfax City, Va., to $575,000; in Fairfax County to $580,000; in Montgomery County, Md., to $483,000; and in Prince George’s County, Md., to $345,000. Median price is not the same as average price. The median price represents the midpoint, meaning half the homes sold for more than that price and half sold for less.
Bright MLS uses sales data from homes listed on its multiple listing service, while Black Knight uses deed records filed with the local jurisdiction, which is why the numbers differ.
The District continues to have the highest median price for a single-family house and condo of the three jurisdictions, according to Black Knight data. Prices improved to $755,000 for a single-family house in 2020, up from $659,120 in 2019. D.C. condo prices climbed to $480,000 in 2020 from $455,000 in 2019.
Condo prices were broken out from single-family house prices to provide a more accurate picture of the market. Condos tend to be less expensive than single-family houses and can drag down the median price in a Zip code. The Bright data includes condos.
In the Maryland suburbs, the median price of a single-family house was $435,000 last year compared with $402,000 in 2019. Condo prices grew to $305,000 in 2020 from $295,000 in 2019.
In the Virginia suburbs, the median price of a single-family house was $640,000 last year compared with $595,000 in 2019. Condo prices rose to $400,000 in 2020 from $380,000 in 2019.
More than 60 percent of the homes sold in the Virginia neighborhoods of McLean (Zip code 22101), Great Falls (22066) and North Arlington (22207) sold for more than $1 million, according to Black Knight data. More than half of the homes sold in Chevy Chase, Md., (20815), Bethesda, Md., (20816) and the Friendship Heights/Chevy Chase neighborhoods in D.C. (20015) sold for more than $1 million.
Bladensburg, Md., (20710) saw the biggest gain in median sales prices, rising to $293,500 last year from $172,000 in 2019. But this shift had more to do with the types of homes sold. In 2019, 25 condos sold and the median price was $70,000. In 2020, 12 condos sold but the median price improved to $112,500. In 2019, 32 single-family houses sold and the median price was $289,000. In 2020, 30 single-family houses sold and the median price was $305,000.
Bright MLS also looked at how many homes sold above their list price last year. This metric can indicate how many properties faced a bidding war before going under contract. Half the homes sold in the Beverly Hills/Warwick neighborhood (22305) of Alexandria sold above list price, while 52 percent of the homes sold in Bowie, Md., (20716 and 20720) sold above list price. Overall, 36 percent of homes sold in Arlington, 37 percent of homes sold in Alexandria, 33 percent of homes sold in the District, 42 percent of homes sold in Fairfax County, 36 percent of homes sold in Fairfax City, 40 percent of homes sold in Falls Church, 37 percent of homes sold in Montgomery County and 41 percent of homes sold in Prince George’s County sold above list price.
“Prince George’s and Alexandria were the big gainers year-over-year,” said Anthony Fields, a data analyst at Bright MLS. “Prince George’s last year was kind of a quiet little engine across the region. [There was] a lot of growth in Prince George’s County last year. Potentially, [it] could be emerging as an alternative because the prices are affordable relative to the market.
“You would have thought that National Landing area [where Amazon is planning to build its headquarters] would have sold more homes going over list but it was only about 30 percent of homes in the 22202 [Zip code] that went over,” he added. “That was a very big surprise as well.”
Rising mortgage rates — they’ve risen more than a half-percentage point since January — could tamp down prices if they continue to climb.
“We’re seeing now that interest rates have been sliding up a little bit again and that has actually slowed prices a little bit,” Blix said. “But on the other hand, inventories are still super, super tight so that’s still pushing prices up. It’s a difficult market in general right now for home buyers.
“It’s been basically difficult to find homes for a lot of people,” he added. “You basically end up with bidding wars. You end up seeing people buying homes unseen. There’s two factors driving that at this point. One, it is difficult to go around and look at houses in a pandemic, and two, you don’t have time because these homes are not going to stay on the market very long.”
As more people are vaccinated and the economy begins to recover, that should only bode well for the housing market.
“I think that the inventory pressure is still going to be there with us for a while going forward,” Blix said. “While there are signs that builders are starting to build more, I think we’re still constrained. Are we going to be equally constrained as we are now? I don’t know. Interest rates certainly are going to be low for a while. I don’t know how low. We are starting to see companies thinking about bringing people back into the office, maybe over the summer, maybe later. And that will certainly reverse some of the effects that we’ve seen drive this particular market. So I think it will be an interesting year.”
Brian Donnellan, chief executive at Bright MLS, agrees inventory is what to watch.
“If it starts to meaningfully rise, as sellers become more comfortable with open houses and more normal levels of in-person showings, or due to an uptick in interest rates and rising home prices reducing demand, the market will become less of a sellers’ market, and the rate of price appreciation will abate somewhat,” he said. “That said, the market should remain strong.”