Will DC housing prices drop?
The pricey D.C. housing market is showing signs of cooling, with a drop in median selling prices in May. The Greater Capital Area Association of Realtors said the median price of a home that sold in the District last month was $650,000, 7% lower than in April, and down 5.3% from a year earlier.
Both groups showed a drop in home sales for every month of 2022 compared to the same months in 2021. The latest numbers from April of 2022 show housing sales in D.C. dropped by 10.9% from April of last year. But Yun said don't expect that to make homes cheaper.
From the end of 2021 through the beginning of 2022, the D.C. real estate market was on fire, with a significant advantage going to sellers who sold their homes for much more than they were listed. But now, there are signs that the market may be settling down.
The median price of a home that sold in the D.C. metro area in March was up 9.9% from March of last year. The annual gain nationwide was 20.9% — the biggest annual gain in at least 45 years.
Nothing can last forever and while there is no guarantee that prices will fall in 2022, the current economic conditions mean that it is growing increasingly likely.
Given current mortgage rates, and assuming a 5 percent down payment and average costs of property taxes and insurance, this couple can afford a home priced at approximately $533,000. On the surface, this first-time buyer couple in the Washington region looks to be in a pretty good position to buy a home.
The median home price in Washington DC was $630,000 in 2020 and $660,000 in 2021 which is a 4.8% increase. DC Metro area counties saw similar increases with the exception of Arlington, which had a 2020 median price of $666,000. The 2021 median was $670,000 which is just a . 6% increase.
Overall, the market in DC has favored sellers for years. While inventory may remain limited, opportunities for move-up and first-time buyers in the market, as well as the availability of peripheral neighborhoods, are increasing power in buyers' favors.
Real estate experts say buyer demand will stay pretty darn strong in the second half of 2022. In May, home sellers received roughly 4 offers from buyers, which is lower than April but still about double the number of offers sellers received per month before the pandemic.
Mortgage experts say a slowdown than a crash is in the cards, which is partly due to the unsustainable home price growth of 2020 and 2021. To find out why the US's housing market is cooling off, and what experts are saying about it, read on.
Why is DC housing so expensive?
Housing prices have been rising faster than incomes, putting greater financial pressure on many households. Strong demand combined with insufficient supply are the perfect recipe for steeply rising housing costs.
Why it matters: From Q1 2021 to Q1 2022 rents in the D.C. metro area went up 15.7%, according to Delta Associates data. Delta Associates also found that in 2012, Class A (high end) downtown D.C. apartments went for around $3.03 per square foot per month. In 2020 that dropped to $2.52 but in Q1 2022 it rose to $3.49.
House price growth could flatline to zero next year as mortgage approvals and remortgages start to fall back to pre-pandemic levels.
Experts in a recent Zillow Research survey believe the inventory of housing to return to pre-pandemic levels by the end of 2024. Despite soaring mortgage rates pushing down demand for homes, real estate prices are still sky-high.
It is predicting prices will end this year 8% higher than they were at the end of 2021, and will then rise by smaller amounts – 1.8% and 1.2% – in 2023 and 2024 respectively.
Share: In 2021, home prices went up 16.9% over 2020, which was the highest increase since 1999, according to the National Association of REALTORs®. And Zillow predicts that home prices will continue to climb in 2022, with a 17.3% increase by January 2023.
According to the study, which used home-price data from the fourth quarter of 2018, the annual salary needed to buy a home in the Washington, D.C., metro is $94,408 a year with 20 percent down. If homebuyers in the D.C. region put 10 percent down, the required salary increases to $109,000.
Generally, you'll need a down payment of around 3% for a conventional loan and 3.5% for an FHA loan. If you can put down 20% on a conventional loan, you'll avoid paying private mortgage insurance.
Housing prices have been rising faster than incomes, putting greater financial pressure on many households. Strong demand combined with insufficient supply are the perfect recipe for steeply rising housing costs.
Overall, the market in DC has favored sellers for years. While inventory may remain limited, opportunities for move-up and first-time buyers in the market, as well as the availability of peripheral neighborhoods, are increasing power in buyers' favors.
Is now a good time to buy a condo in Washington DC?
Thanks to the pandemic, the DC real estate market is experiencing a major boom. And for the right buyer, it may just be the perfect time to jump into the market. Of course, there's an art and a science to buying a condo, especially in Washington DC.
What does it all mean for 2022? The property market is expected to remain a buyers' market for a while yet, as banks continue to compete for customers, meaning they offer better home loan deals. But a slow down of movement in the market has been predicted.
