My quarterly update is fashionably late this year, as deciphering the cryptic trends and data in the housing market has left me feeling like Sherlock Holmes on a particularly puzzling case. Over the past 15 years, my instincts have leaned more bearish than bullish, but even a bear can't hibernate through these market surprises. As a matter of fact, I have a knack for buying homes during down markets (2008, 2012, & 2018), but I promise it's not some master plan – I simply prefer moving during quieter times. The bottom line is that the spring market has rebounded beyond my wildest expectations.
Now, let's dive into the intriguing enigma that is the current housing market:
Pricing: Single-family homes and townhomes are flexing their muscles with impressive gains, while condos in DC play the role of the 98-pound weakling. Once the current batch of homes under contract settles, we'll likely see year-over-year gains that'll have national headlines buzzing this summer. And believe me, homes selling for 10-20% over asking prices will make even the most bullish investors say, "Holy cow!"
Inventory: With supply at historic lows (35% down from last year), you'd have a better chance finding a needle in a haystack than a house in Vienna, Mclean, or Arlington. We might see a late surge in inventory around June 30th when sellers get wind of the jaw-dropping prices their neighbors managed to snag. In March of 2023, only 1/3 homes sold over asking price, I see that trend reversing significantly in Q2.
Mortgages: Interest rates have been playing hide-and-seek around 6.5% recently, and buyers seem to prefer the game when rates are around or below 6%. I can't help but wonder what would happen if we hit 7%+ rates again – will the market freeze like a deer in headlights like last year? Adjustable mortgages in the high 5% to low 6% range seem to be the crowd favorite these days.
Commercial Real Estate: Although it's not my area of expertise, I can't ignore the ominous storm clouds looming over the commercial sector. If the Fed is forced to stop raising or even cut rates, we might see a steroid-induced frenzy in the housing market. Talk about a plot twist!
As always, this email focuses on our local markets, and I'm here to help you navigate these thrilling and unpredictable times. If you have any questions or need assistance, please don't hesitate to reach out. Let's crack the case together!