t seems that many buyers in our market are waiting on the sidelines to see if prices in our area will decrease. As expected, the national housing market slowed in September in response to the Fed’s efforts to curb inflation by making money more expensive. According to the US Department of Housing and Urban Development existing home sales declined for the seventh consecutive month and are down 20% from last year and housing prices continue to decline month over month.
The story in the DC Metro area is different, however. While September sales figures reflect a decrease in market activity, the median sales price of homes increased from last year by 3.3%.
The DC market seems to be insulated from the downswings many markets experience. During the last market shift, we fared far better than most areas, and it looks as though that is happening again. Prices in our area remain high due to a housing shortage. With the Fed’s efforts to increase inventory by making homes more expensive to buy, DC’s housing inventory has increased to a 1.4 month supply. The standard benchmark for a balanced housing market, however, is six-months, making DC a market that still leans in favor of sellers.
While housing prices in our area continue to increase, sellers have been slow to realize that the rate of price growth has decreased. Many sellers are pricing too aggressively. According to Bright MLS, 40% of sellers in the Mid-Atlantic have lowered their list price. On average, home prices were reduced by 7% from original list price. However, it is important to note that even with these price adjustments, prices are still 20%-40% higher than before the Pandemic.
Without a crystal ball, we won’t know what may happen in the future with interest rates, prices, and supply of homes. The one thing we know (almost) for certain, is that interest rates will continue to rise. For this reason, if you are in the market to buy a home, rates are lower now than they will be in a few months. Buyers have advantages now that didn’t exist a few months ago: there is less competition, buyers have more leverage with sellers and more time to make decisions.
If you are in the market to buy or sell a home, let us help you negotiate this market.
