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Washington, DC Real Estate Market Forecast 2023

Washington, DC Real Estate Market Forecast 2023

The real estate landscape in Washington, DC, often captures media attention. Factors like housing availability, surging demand, and fluctuating interest rates affect home prices not just nationally but also at a local level. However, the DC market doesn't always align perfectly with national projections. Understanding the intricacies of the national and local DC markets is crucial for those engaged in buying or selling properties. If you're focusing on Washington, DC, it's beneficial to stay informed about local expert projections for 2023 to make well-informed decisions.

Interest rates will likely rise nationally before they fall

The shortage of available housing was greatly magnified in the early days of the 2020 COVID-19 pandemic. This shortage was met with an unusually high buyer demand, leading to record median home prices and lower interest rates set across every major real estate market in the United States.

The Federal Reserve began to increase interest rates in 2021 in an effort to fight both high inflation and out-of-control home prices. This strategy seemed to work, with home prices falling year-over-year for the first time in over a decade in April 2023.

But this relief was only short-term. Though closings are down in number, the short supply and high demand have increased median home prices. Forecasters predict the record high for home prices set in June 2022 will soon be broken.

It’s important to note that the Federal Reserve has hinted at increasing interest rates again in November — a factor that will greatly affect buyers moving into 2024 and is certainly poised to impact the Washington DC housing market.

How the national real estate market impacts Washington DC

The median home price in Washington is already leaps and bounds above national averages. In July 2023, the median sold price for a single-family home in Washington, DC, was $625,000, a three-point-seven percent increase from the previous month. At the same time, new and pending listings dropped.

Higher interest rates are keeping many homeowners in their current homes, further tightening the supply. Until rates drop, don’t expect the available housing supply in Washington to increase significantly.

But when will rates drop? Market experts recently stated that the Federal Reserve will likely lower rates as early as February 2024. As inflation gets closer to reaching the Fed’s target goal, there won’t be as strong of a need for higher rates. Predictions indicate that bigger cuts will happen over the remainder of 2024.

With lower interest rates on the horizon, it’s likely that current homeowners will make the move to list their properties. And while this will work to increase the supply of homes, lower rates will also drive up the demand for homes. As a buyer or seller of Washington, DC, real estate, this means paying careful attention to market cues and laying out a solid plan.

What to expect as a buyer in the Washington market

If you are on the fence about buying a home in Washington, DC, your hesitation could cost you. While waiting for interest rates to drop before purchasing a home will certainly save you money over time on your mortgage, it can also have a devastating impact on your wallet. Home prices are expected to rise no matter what interest rates do. Waiting even six months to buy a home can mean paying a lot more for a house in the future than you would today. But if you can lock in on a home at today’s prices, you’ll be earning near-instant equity when home values rise over the next year. And as far as paying more interest rates, there’s a solution there, too. There’s always the option of refinancing.

How should you react to the forecast as a seller in the Washington market?

Sellers might be a bit hesitant, too, when it comes to diving into the market. While the Washington housing market is clearly geared toward the seller today, getting into a new home will mean paying a higher interest rate. Additionally, you’ll be paying more for a house than you would have when you first bought the one that you’re currently in.

A real estate agent will be able to get you the most for your listed property. Their marketing ability will attract more qualified buyers than you would be able to on your own, increasing the chances that the right buyer — and their offer — will come along. Besides, a real estate agent’s negotiating tactics will ensure that you get your new home for the best possible price.

Washington DC neighborhoods to watch

Nestled in the heart of the nation's capital, Logan Circle dazzles visitors with its perfect blend of historic charm and modern flair. Elegant Victorian rowhouses line its leafy streets, while hip boutiques, vibrant eateries, and trendy art galleries offer endless entertainment. The neighborhood’s centerpiece, the iconic Logan Circle park, invites all to relax amidst its serene setting, making it a favorite spot for both locals and tourists.

Just a short distance away, Capitol Hill stands as a testament to the country’s rich history and political legacy. Beyond the awe-inspiring dome of the U.S. Capitol building, this neighborhood boasts a diverse range of attractions. From the bustling Eastern Market, where fresh produce and artisan crafts await, to the quiet, cobblestone lanes echoing stories of the past, Capitol Hill is a treasure trove of experiences.

Together, Logan Circle and Capitol Hill encapsulate the essence of Washington, DC: a harmonious blend of the old and the new, ready to be explored and cherished by all who wander their streets.

Ready to take the next step?

Buying or selling real estate in any market should involve a well-thought-out strategy. In the Washington housing market, your moves as a buyer or seller will be better laid out with the guidance of an experienced real estate agent. Washington luxury homes, in particular, will require a seasoned hand to guide the transaction. The agents at The Tom Buerger Team have years of experience and dedication to make your real estate transaction a seamless and stress-free process. If you’re looking for homes for sale, wish to list yours on the market, or would like more information about the Washington real estate market, contact The Tom Buerger Team today.

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