The Washington-area housing market enjoyed a solid year in 2017. Prices continued to climb, but the increases were more modest than dramatic. Sales were mostly up but constrained by low supply.
“2017 was an interesting year for the D.C. regional housing market,” Terry L. Clower, director of the Center for Regional Analysis at George Mason University, wrote in an email. “Inventories continued to tighten, which caused the pace of housing sales to slow in the second half of the year across the region, but there was substantial variance in price behavior among the three jurisdictions.”
The median sale price for single-family houses and townhouses in the District ticked up 1.4 percent last year from 2016, increasing to $649,000 from $640,000, according to data provided by Black Knight, a national real estate data analytics company. It was the eighth consecutive year the median price of single-family homes and townhouses has increased in the District.
Condos in the District didn’t fare as well. The median sale price of a condo in the District slipped 2.85 percent last year from 2016, falling to $426,500 from $439,000. Sales of condos also fell, dropping to 2,851 from 3,165.
For the first time, we are breaking out condos from single-family homes and townhouses to provide a more accurate picture of the market. Condo prices tend to be lower than single-family house and townhouse prices and can drag down the overall median sale price.
Condos in the Maryland suburbs had the steepest price increase. The median sale price of a condo in Maryland climbed 3.64 percent last year, rising to $259,000 from $249,900. It was the fourth year-over-year increase in the past five years.
The median sale price of single-family houses and townhouses in the Maryland suburbs was nearly flat last year, edging up 0.62 percent, to $375,000 from $372,674.
Virginia had the strongest year of the three jurisdictions. The median sale price of single-family houses and townhouses in Northern Virginia climbed 3.38 percent last year, rising to $547,900 from $530,000.
The median sale price of a condo in Northern Virginia jumped 3.03 percent last year compared with 2016, rising to $340,000 from $330,000.
Even within the three jurisdictions, certain areas fared better than others. In Arlington, Zip code 22206, the median sale price of a single-family house increased to $537,000 last year from $430,000 in 2016.
“The homes sold in 2016 were on average a bit older properties than those sold in 2017,” real estate agent Keri Shull of the Keri Shull Team wrote in an email. “In 2017, there was at least a handful of homes that were built more recently, which sold for higher sales prices and increased the median sales price for that year.”
Shull also noted that Arlington County has made significant improvements to its public transit system, particularly its bus routes, which have made the area more desirable and contributed to the increase in home values.
Hyattsville is another place where prices shot up. The median sale price of a condo in Zip code 20782 more than doubled, rising to $240,000 last year from $111,300 in 2016.
“Hyattsville has a highly desirable proximity to D.C. whether driving or by Metro,” Ariana Loucas, a real estate agent with Re/Max Living, wrote in an email. “Over the last couple of years, the area has been redeveloped to attract millennials and those that may not want to pay the increasing housing costs to reside in D.C. Developers, builders and investors recognized the potential of Hyattsville and focused on constructing and improving the quality of housing and shopping. New condos built directly around the shops increased closed condo values.”
The lack of homes for sale threatens to push prices higher. But prices are being held somewhat in check by rising mortgage rates, which are hampering affordability.
“In general, we expect to see home prices continue to escalate in the region for three reasons: the population is continuing to grow, the inventory of units for sale will remain constrained, and the recently passed federal budget will drive job and wage growth for the metro area,” Clower wrote.
The tax bill, which contained a limit on mortgage interest and property tax deductions, passed too late in the year to have an impact on last year’s housing market. Clower doesn’t expect it to negatively affect the region.
“In the short term, the changes in the tax law will have a negligible effect on housing market performance in the D.C. region, except the extent to which the combination of the tax law and the new federal budget contribute to interest rate rises that affect mortgage affordability,” he wrote. “In the longer term, I do not expect the new mortgage interest deduction rules to make a difference on average, though the market, for some specific price-point homes, could be somewhat affected. The loss of deducting state and local tax liabilities from federal taxable income will dampen public sentiment towards local tax increases, which will make it harder for local jurisdictions to take on the infrastructure investments, including education services, that would attend the creation of new housing units. This will further erode housing inventories in the long run and exacerbate our existing problems with the availability of workforce-priced housing.”
Each year we ask Clower to look into his crystal ball and predict which areas will do better than others. He expects Prince George’s County to do comparatively well, the District to remain strong in pricing and Northern Virginia’s inventory challenge to become more acute. He also wrote that if Amazon announces it is putting its second headquarters here, “the market will get crazy.”
“I do think that activity will rise now that we have a federal budget and that by the end of year we will see a reasonable growth in prices, but sales activity will remain constrained by inventory,” he wrote. “In a related note, I do not think it will be a particularly good year for mortgage brokers/companies because of lower unit sales and a dramatic lowering of refi activity now that mortgage rates are steadily moving upward.”
The median price of a single-family house sold in this Northwest Washington Zip code was $1.25 million, the most expensive place to buy a single-family house in the Washington region.
The median price of a single-family house sold in this Fairmount Heights Zip code was $199,999, the most affordable place to buy a single-family house in the Washington region.
The largest year-over-year price gain in the area was in this Forest Heights Zip code. The median price rose $33,000, a 15 percent increase.
Congress Heights is one of the hottest neighborhoods in the District. Sales jumped 62 percent from 2016, rising to 138 sales from 85.
The median price of a condo sold in this Arlington Zip code was $690,000, the most expensive place to buy a condo in the Washington region.
The median price of a condo sold in this Zip code, which includes Adelphi and Langley Park, was $75,000, the most affordable place to buy a condo in the Washington region.