David Charron, president and CEO of Rockville-based multiple-listing service MRIS, writes an occasional column about the Washington-area real estate market.
The District’s real estate market is poised to continue its upward trajectory this spring.
It’s still a strong sellers’ market with inventory falling short of demand. However, more buyers have greater purchasing power and interest rates are still strongly in their favor.
Here’s a closer look at what we’ll likely see in three hot neighborhoods in D.C. this spring:
[Editor’s note: For more analysis of the local real estate market, check out the Real Estate section’s Spring Home Guide on March 14, 21 and 28 and online sites Where We Live and washingtonpost.com/realestate during those weeks.]
Capitol Hill remains one of the most popular places to buy a home. Northern Capitol Hill (Zip code 20003) continues to see an increase in the number of properties coming on the market. This neighborhood’s median selling price has also increased, reaching a peak of $710,000 last July.
The pattern of sales prices in Capitol Hill South (Zip code 20002) is another sign of growth in the city. Typically, we see sales prices decrease at the end of each year during the seasonal slowdown. But this is surely a bright spot where prices maintained an upward trajectory. This demonstrates the strong demand for homes in this area.
Watch for more properties to go to market this year in the Howard University/Shaw neighborhood. Shaw has had an increased presence on the real estate radar over the past few years. There was a surge in listings last fall, which is a sign of bigger things to come.
We already know the demand is there because in January, a month not known for much activity anywhere in the city, the median days a house was on the market was just 12. This is less than half of the five-year average of 27. Median sales prices were $579,900, well above the five-year average of $514,740.
Columbia Heights/Mount Pleasant
Last year, we cited Columbia Heights/Mount Pleasant as one of the hottest neighborhoods for condos and townhouses. However, the upward trend in inventory it experienced during 2013 and into 2014 has softened.
But that does not mean it isn’t still a coveted place to buy a home. Price trends since 2012 have increased tremendously. During 2012, median sale prices were in the $400,000s. They reached the high $500,000s during 2014. They even nudged over $600,000 for two months last year.
So demand is still there, but the inventory isn’t. Typically, this means any growth will come in the form of higher sales prices. However, since Columbia Heights has such high density and appeals to younger buyers who may have a hard time buying in this price range, it is possible that there will be a slight slowdown in activity compared to what Columbia Heights has seen the past two years.
Besides geography related changes in growth, we’re also seeing a shift in the types of housing that comprises the District’s inventory. The first few years of this decade were characterized by condos and co-ops. Townhouses are now making bigger strides in market share.
In January, the number of townhouses for sale in Columbia Heights/Mount Pleasant was almost double the number in January 2014. We haven’t seen this trend for a few years.
The resurgence of townhouse listings is most likely caused by a mix of factors. High-price sellers have greater confidence that they’ll make a profit if they sell now. Moreover, developers who see the market trends shifting are returning to rehabbing row houses as single-family homes rather than turning them into multi-unit condos.
While homes in mid-range prices in the most popular neighborhoods are still the most competitive part of our local market, things have certainly improved dramatically compared to a few years ago. The uptick of activity has increased almost everywhere in the city, but a few places have shown significant enough changes that they are worth paying closer attention to this real estate season.
For a rise in inventory, keep your eye on Columbia Heights/Mount Pleasant. For a rise in prices, watch the Shaw area. And stay tuned to Capitol Hill for increases in both price and inventory. No matter which of these becomes the hottest neighborhood for 2015, the city as a whole is going to have a good year.
Previously from David Charron: