2023 had many bright spots in our real estate market. First, prices remained relatively steady. Single family properties median and average prices were $846,000 (-8%) and $1,081,000 (-5%) respectively. We never like to see minus numbers when compared to a previous year, but as a share of the market, properties priced above $500,000 declined in 2023.
There are two reasons. First, higher interest rates had many buyers and sellers taking a pause…particularly true in the upper brackets. Let’s look at the number of sales in 2023. In hindsight, 2020 is the most recent high with 4,867 sales citywide. Q1 of Covid year (2020) we were in the tank. By the end of the year, we were setting records. Go figure.
By 2022, 4063 sales and 2023, 3391—a drop of 30% from 2020 through 2023! We can blame some of this on higher interest rates. But a bigger factor has been and continues to be a lack of inventory. We are not building many new single family homes in DC and our older population is finding ways to age in place. There are lots of positive reasons for that and it’s a trend that won’t be changing any time soon.
As we look to 2024, if interest rates continue to decline to say to 4.5% – 5% range, we should see a bigger surge in buyers, more competition and slightly higher prices. The continued problem of less inventory will bring stable to slightly rising prices. But we are all guessing at this point.
There is lots of uncertainty in the world right now and many things could happen to cause issues in our marketplace. It’s an election year and that brings uncertainty. However, we continue to have a diversifying economy and the impact of election results doesn’t have the impact that maybe it once had. To the extent that there is an impact, it will be negligible. What is for sure, with razor thin margins in both the Senate and the House, Hill staffers will freeze in place (relative to buying a home) until they are sure they still have a job after the election in November. Same for senior level Federal employees.
One pattern that will not change is that historically 60% of our contracts are written in the first six months of the year. That leaves 40% in the second half of the year. Things still sell in the second half but there is a chilling decrease. The bottom line, if you think you want to sell in 2024, get it on the market and under contract before the 4th of July!
Don Denton is Associate Broker at Coldwell Banker. 202-256-1353, [email protected]
