There is enough bad news out there that I don’t really feel like writing another negative market update. With that said, sometimes we have to do things we don’t want to do. I’ll keep this simple and stick to what the numbers and the homes I’m seeing actually tell us.
According to our local MLS, showings across the DC metro area were down 12.7% from a year earlier during the week ending September 20, and new contracts were down 12.5%. At the same time, new listings were up 7.3% and the number of homes actively for sale was up 18%. In short, there are more homes on the market, but fewer buyers are making a move.
If you own a single-family home in an established neighborhood with schools buyers seek out, you will probably be just fine should you decide to sell. Buyers who need that combination do not have unlimited choices.
The gap between buyers and sellers has narrowed, though. You may still sell quickly and get your asking price if the home is priced well, but there is less room for error. Be prepared for a real negotiation, inspection repairs or credits, and perhaps a couple more weeks on the market.
Yes, your neighbor got four offers in the first weekend last year. That’s great for your neighbor. It doesn’t mean your home will get the same response today.
Entry-level townhomes and condos are in a tougher spot. Buyers are watching the monthly payment closely, especially after another move up in rates.
One change I’m seeing is that some buyers who want a two-bedroom condo are shopping for a one-bedroom instead. They would love the extra room. They simply cannot make the payment work. I’ve long preferred a two-bedroom over a one-bedroom as an investment, but buyers have to purchase what they can afford now, not what would be ideal in theory.
The luxury market is a bright spot in some places, but it gets complicated fast.
In the $3 million to $4 million range in McLean, the inventory I follow has gone from more than six months of supply to around three months. Go above $4 million, and it’s a different story. At the time I checked, there were roughly 50 active listings, 11 coming soon, and only three sales in the previous 30 days. That is a lot of competition for sellers and equates to about 18 months of inventory. A massive jump from a year ago.
Calling both of those markets “luxury” does not make them behave the same way.
I’m also watching the homes between the entry-level condo or smaller townhome and the single-family house in a school district buyers are targeting. Think higher-priced townhomes in more urban settings, or single-family homes where buyers are less confident that the location will work for them long term.
Those homes can be a tougher sell right now. Buyers taking on a larger payment are being more selective about what they get for it. If the house does not solve the problem that prompted the move, they are more willing to wait.
A lot of the people moving right now have a reason they cannot easily put off. Their kids are growing, they are relocating, or they need a home that will work for the next several years. They may not want to move with rates where they are, and they definitely do not want to move again in a few years.
That makes the right school district a major criterion for many families. It can be the thing that finally compels them to act, even in a slower market.
The market is cooling, but the story changes from one neighborhood and price point to the next. These numbers can’t tell you what will happen with a particular home. Right now, the difference between a strong sale and a frustrating one often comes down to the location, the asking price, and what else buyers can choose from that week.