There's officially a new administration, and with it, a new energy in the housing market. This new energy is bringing a mix of optimism, anxiety, and uncertainty for buyers and sellers. The "Back to Office" mandates are a major factor and seem to be the #1 thing on the minds of sellers and buyers, with some sellers hoping to capitalize on increased demand while buyers grapple with high prices, rising interest rates, and increased competition.

A Mixed Bag

The market is sending mixed signals. While some sellers are optimistic about the return to office, the numbers tell a different story. Pending sales across the DMV are down about 10% compared to last year, driven by high prices and rates over 7%. This time last year, rates were closer to 6%, making homes more affordable.

My conversations with clients reflect this uncertainty. Some sellers, particularly those with townhomes or more affordable price points, believe holding out for the full impact of "Back to Office" could lead to better offers. On the other hand, I recently worked with a government employee relocating back to the area who was “depressed” by the combination of high prices and high interest rates, making them reconsider their move altogether.

Even our lower-priced listings, which saw a brief surge of activity, failed to generate any actual offers. This indicates a cautious buyer pool.

A Frothy Market

Looking at recent data from Ekko Title's "last ten" contracts, the picture becomes even more complex:

  • 4 contracts were over asking price
  • 3 were at asking price
  • 3 were below asking price
  • 9 out of 10 buyers paid a buyer agent commission
  • Almost all contracts included contingencies and many included seller subsidies

This suggests a "frothy" market with competing forces. There's still competition for desirable homes, but buyers are becoming more discerning and demanding concessions.

The "Back to Office" Effect and Inventory Concerns

The big question is: where will all the returning office workers live? This trend started last year, with many buyers targeting homes under $1 million in already competitive markets. Now, those same buyers face higher interest rates and increased competition in an already depressed inventory environment. 

Adding to the challenge, many homeowners who might have sold last year are now hesitant due to job security concerns or the prospect of buying with higher rates. This could lead to fewer homes coming on the market, further tightening inventory.

Navigating the Uncertainty

The DMV housing market is navigating a complex landscape. While "Back to Office" mandates have the potential to increase demand, the reality of high prices and elevated interest rates presents a significant hurdle for buyers already hesitant to enter the market.

The coming months will be critical in revealing whether the allure of "Back to Office" will outweigh these financial pressures, ultimately shaping the market's trajectory.

Khalil El-Ghoul

Discover our 2.25% Full Service Listings and alternative commission models for home buyers. Khalil is dedicated to guiding home buyers and sellers with expert advice and objective information. For professional real estate assistance, text Khalil at 571-235-4821 or email khalil@glasshousere.com today.