The District’s real estate market remained in fifth gear even from June to August when activity typically slows down considerably, experts say, a strong harbinger for the fall.
“D.C. is the queen of the show in the region,” says Donna Evers, broker and owner of Evers and Co. Real Estate in Washington. “Demand for homes in the city really never slowed down this summer, the way it normally does, and we expect the momentum to continue right into the fall.”
Evers says inventory is still not going up in the city, so sellers often have the confidence to put their homes on the market at a modest asking price because they know buyers will bid it higher.
“Millennials and baby boomers are driving the market in the city,” Evers says. “Access to public transportation and walkable amenities are more important than ever, because of the gridlock in this area.”
All indicators have been up so far this year in the District, says Jonathan Hill, vice president of marketing and communication for multiple-listing service MRIS in Rockville. The total volume of sales is up 5.4 percent year-to-date from January to August compared with that same time period in 2014. The median sales price is up 5 percent, the number of units sold is up 2.7 percent, and the average number of days on the market is down 0.75 percent.
“All those numbers are further evidence of how skewed D.C. is, because of the lack of inventory,” says Hill. “In August, D.C. had just a 1.8 month’s supply of homes, compared with about 3.7 month’s supply in Northern Virginia and 3.3 in Maryland. Even if inventory rises a little this fall, it’s still nowhere near the peak of the market.”
The District is the least-seasonal market in the area, says Nela Richardson, chief economist for Redfin in Washington.
“Sales slow down a little in August since a lot of people are away, but more buyers here are unconcerned with the school calendar, which drives a lot of the seasonality in sales in Northern Virginia and Maryland,” Richardson says. “We’re likely to see a pop in listings just after Labor Day when people get back from vacation, and I don’t expect the market to slow at all in the city until later in November or December.”
Richardson says that sales have outpaced 2014 throughout the year in the District.
Richardson says single-family houses are the most sought-after in the city and the most difficult to find.
“We’re seeing a little more inventory available of one-bedroom condos in the city because buyers seem to want a little more space,” Richardson says. “Eventually we may see a price-drop in those smaller condos.”
Hill says that the largest segment of sales in the city is about evenly split between detached single-family houses with four or more bedrooms priced from $1 million to $2.5 million and attached townhouses priced from $600,000 to $800,000.
Redfin’s Housing Market Tracker for August shows that prices have continued to rise in the city and that homes are continuing to sell quickly. Mount Pleasant is the city’s fastest-moving neighborhood, with homes selling in less than a week, but the average number of days on the market before a property goes under contract for the entire city is just 10 days.
Sale prices have risen 50 percent in the Bellevue, Congress Heights and Washington Highlands areas compared with August 2014. New listings were up almost 60 percent in Pleasant Plains compared with this time last year. Although Georgetown may seem a little less hip in comparison with the U Street Corridor and 14th Street NW, almost half of the sold homes in Georgetown went for more than their asking price in July, which shows that this venerable neighborhood is still desirable.
Redfin’s anecdotal evidence shows that there may be a psychological change among D.C. buyers.
“We’re hearing that buyers are just getting tired of the lack of inventory and fighting in bidding wars,” Richardson says. “Earlier in the year, and last year, we saw buyers who were focused on buying anything they could find, but buyers are less likely to overbid for a home. Mortgage rates have been low for so long that buyers now are more willing to wait for the right property.”
Richardson anticipates that price appreciation will slow later this year in the District because prices have gone up too much. Year to date, the median home price in Washington is $643,000, Evers says.
Demand for homes is driven by employment, consumer confidence and household formation, which are all positive indicators in the region, says Dan Fulton, senior vice president of John Burns Real Estate Consulting in Reston.
“Our August report for the region shows solid employment growth, particularly in the category of professional and business services, which are higher-paying jobs that are held by people who tend to buy homes,” Fulton says. “Solid growth in that sector generates six months or more of good demand for homes.”
In addition, household formations are up, Fulton says. Although some of those households may rent initially, some buy a home right away because of the high rents in Washington.
Government contractors and employees are a big part of the home-buyer population in the D.C. area, so federal budget decisions and uncertainty about government employment and contracts affects the local housing market.
“Consumer confidence is up in the area, now that people have more confidence that the worst of sequestration is behind us,” Fulton says. “The federal government budget process seems more stable to people now than it did a year or so ago, too.”
Assuming there’s no “crazy news” in the U.S. or global economy, Fulton said he thinks D.C. buyers and sellers should expect a spike in fall home sales.
Michele Lerner is a freelance writer.