The median home price in Washington, DC is $475,000 in January 2023.
This is up by just 0.5% from this time last year. However, it’s notable to keep in mind that the median home price is down around 3% from December 2022. This is a clear indication that the Washington DC housing market is cooling off.
The entire Washington DC real estate market experienced a boom in the last few years. This ensured massive gains for property investors in the region. If you take a look back at the median home price in 2020, you’ll find that the price is under $400,000.
Prices continued to rise in 2021 but reached a peak in the first half of 2022. Home prices in the region have steadily been on the decline ever since. This is why real estate investors are thinking about selling their property before prices fall any further.
A similar trend is appearing in the Arlington, VA housing market. Could this be a clear sign that it’s time to sell? While it’s important to keep an eye on the data, there are additional insights that you should take into consideration before making any big decisions.
This will help you understand the current state of the housing market so that you can make more informed decisions for your portfolio.
Continue reading to see what these three insightful housing reports have to say about the future of the housing market in this region.
1. Housing market cools down at the beginning of the year
The beginning of 2023 saw the housing market in Washington DC fall by 3%. While prices are still up slightly since January 2022, the trend is clear.
Paige Hopkins did a deep dive on this for Axios and noted that the interest rate is the leading cause of home prices cooling off. This puts both sellers and buyers on the same playing field.
Higher interest rates mean there’s less competition in the housing market. Since there are fewer buyers, sellers may have to drop their prices to find a buyer for their property. Sellers are forced to drop their prices if they want to remain competitive in the market.
Many signal that this is a transition from a seller’s market to a buyer’s market. As home prices cool off, Axios predicts that more homes will come on the market soon. This is because real estate investors will want to sell their homes now to secure pandemic profits.
Jeff Clabaugh wrote for wtop news and noted that home prices may stabilize this year in the DC area. This is primarily due to the fact that interest rates don’t seem to be going up anytime soon. This encourages people to hold onto their homes and enjoy a conservative 1% gain for the year.
While a 1% gain may have been impressive in the past, the real estate market in DC has grown used to much more impressive gains. This is why the median home price shot up from under $400,000 in 2021 to over $550,000 in the middle of 2022.
2. New construction might revive city’s population
When it comes to the demand for housing, the population of a city is the most important figure to keep an eye on. This is why the Mayor of Washington DC plans to boost the population within the metro.
In simple terms, if there are more people in DC, more people will need to look for housing. This means that there are more buyers in the market. This also means that real estate investors will enter the market to buy property and rent it out to people moving to Washington DC.
Either way, a rising population is bound to make home prices rise. The Mayor of Washington has announced an initiative to bring people to DC. This was outlined by Cuneyt Dil and Paige Hopkins for Axios.
This plan includes converting office buildings into new apartments. The entire investment is not just to add more real estate to the market as it plans to create additional jobs in the region. It’s important to remember that Metro doesn’t plan to covert office buildings themselves, but would rather launch incentives for real estate companies to do this.
This will repurpose office space that’s not being used in the area. Additionally, this will encourage additional investment in the city itself. More people means more stores, shops, malls, and schools.
Hope Hodge Seck also wrote about this trend for the Washington Post. Here, she outlined how reinventing buildings and spaces can help encourage investment in the area. This is the approach that seems to be working all around the world.
Private companies are also looking to invest in the region. Amazon is one of the biggest investors as they’re looking to open a 22-story building in Pentagon City. Cuneyt Dil noted that there are a number of developments that investors should keep an eye on in the area.
These new buildings offer a unique opportunity for both buyers and sellers. If you own property in that area, you can sell it for a profit as new developments are planned to rise up. Investors can also double down in the area to expand their property portfolios.
This makes it a win-win situation for everyone in the region.
3. Office, the new future of housing
The Mayor of DC has noted that there are a few notable developments coming up in the region. These developments include housing but also incorporate economic development through new jobs.
The local government seeks to incentivize development in downtown DC through tax relief for real estate investors. This will help encourage investors to invest in all kinds of property and economic initiatives in the area. This is all in the hopes of creating a vibrant, 24/7 economy.
Offices to apartments
When it comes to creating space for these new developments, it seems like offices are going to be phased out. These office buildings are being converted into multifamily homes and apartments. It aims to redesign the entire downtown area so that the entire economy can benefit.
Keith Loria outlined this trend in the Commercial Observer. Turning office blocks into apartments is the most innovative post-pandemic idea. This is because offices have suffered and continue to suffer in the modern economy.
Since people moved to work from home, getting back into the office has been a struggle. The convenience of working from home is notable and resulted in businesses saving on their overheads.
This left much of downtown DC empty and unoccupied. Real estate companies that operated in the area took significant hits. This impact is still being felt by real estate investors in other markets as well.
The Alexandria housing market has also taken hits in the commercial sector. Converting these properties into residential housing repurposes the space. This helps make the most of the real estate that’s already there.
All three housing reports conclude that the general economy is having an impact on home sales in Washington, Arlington, and Alexandria. There are a few common causes for this. The biggest factors include inflation and federal interest rates.
These interest rates have cooled off and there’s no clear sign that they will increase any further. This does give the impression that the housing market may stabilize in 2023. However, the effects of higher interest rates have made the cost of everything more expensive.
This means that the cost of living has increased all over the country. Even if interest rates remain the same, homes are still more expensive to finance today than in the last few years. Many experts agree that prices may rise again only when interest rates drop.
It’s not clear when interest rates may begin to drop. This is why real estate investors are considering selling their homes before prices fall any further. Whether you have a second home in the area or an entire portfolio of properties, it may be time to sell and lock in your profits.
The Washington DC housing market in 2023
When you take a closer look at these housing reports, you’ll notice that inflation and interest rates play a major role. Rising interest rates are making homeownership more expensive for the everyday person. The lack of buying pressure is causing home prices to fall.
If you’re looking to lock in your profits, now is the perfect time to sell. With the help of platforms like iBuyer.com, you can get a home valuation in the blink of an eye. Visit our website for more information on how we can help you sell your home.