Dec 9, 2023 - Real Estate

Where D.C.'s housing market stands heading into 2024

Data: Redfin; Chart: Alice Feng and Tory Lysik/Axios Visuals
Data: Redfin; Chart: Alice Feng and Tory Lysik/Axios Visuals

Two-decade-high mortgage rates and an inventory crunch shaped Washington's 2023 real estate market.

Why it matters: A year that saw record-low housing affordability is coming to an end.

What they're saying: "Interest rates were a big deal," DMV-based agent Daniel Heider tells Axios. But, he says, the biggest challenge for D.C.-area buyers was inventory.

The big picture: Mortgage rates sidelined many buyers in 2023, but a growing share of buyers bought in cash.

  • "There's a lot of wealth here," Heider says. And life events, like getting married or having a baby, force people to make housing decisions — despite mortgage rates or market conditions.
  • "Come hell or high water, people are choosing to purchase real estate," he says.

By the numbers: Home sales slowed in D.C. and across the metro, but low inventory propped up prices in 2023.

  • In D.C., home values have appreciated roughly 22% since January and are up 3.5% from this time last year, per Redfin.
  • Inventory is down 21% from last year across the region.

Yes, but: If mortgage rates fall, 2024 will be a competitive market with higher home prices and multi-offer scenarios, Heider predicts.

Zoom out: U.S. home sales have cratered as many homeowners clamp down on their lower mortgage rates.

  • "If there's nothing out there for me to buy, why would I sell? We are all kind of stuck in that paradigm right now," chief economist Matthew Gardner at Windermere Real Estate said at a November conference.

What we're watching: Mortgage rates would need to slide significantly to loosen homeowners' golden handcuffs and boost listing activity, real estate experts say.

  • America's housing shortage is particularly concerning for the wave of younger millennials and Gen Zers in the homebuying pipeline, Gardner said.
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