“The party’s over,” according to Lisa Sturtevant, chief economist at Bright MLS.
Overall, Sturtevant anticipates that home prices won’t drop even in the cooling market conditions. However, some localities have a greater risk of price declines. Generally, these are neighborhoods where prices grew faster than average over the past two years, where inventory is rising fast and where household incomes are lower than the average for the region.
In addition, the communities most at risk include those where second home buyers drove up prices during the pandemic and where remote workers relocated and heated up demand — in other words, rural and exurban areas, and vacation home markets.
Sellers beginning to reduce prices
Sellers began to recognize the slower market conditions and perhaps realized that they had overestimated buyer demand earlier this spring, especially as higher mortgage rates cut into buyers’ housing budgets.
Approximately 24 percent of homes for sale in D.C. had a price drop in June, according to data provided by Bright MLS. By neighborhood, price drops ranged from a low of eight percent of listings in Park View to a high of 46 percent in Fort Dupont Park.
Other D.C. neighborhoods with the highest percentage of reduced sales prices include Marshall Heights (43 percent), Southwest Waterfront (42 percent), Carver Langston (39 percent) and Lily Ponds (39 percent).
Neighborhoods where sellers lowered their prices in June include Adams Morgan (30 percent), Deanwood (29 percent), Dupont Circle (26 percent), Georgetown (23 percent), Petworth (20 percent), Mount Pleasant (20 percent) and Capitol Hill (19 percent).
Thinking about buying a home? Let us help.
Buying a home can be a daunting process. We’re here to help. Start with our Home Buyers Guide, which has everything from important real estate vocabulary to how to find a real estate agent to mortgage options. Or start below for helpful advice on navigating the housing market, or ask us your questions here.