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Does the DC Area Have a Mismatched Housing Market?

by Nena Perry-Brown

Does the DC Area Have a Mismatched Housing Market?: Figure 1

Between a chronically low supply and relatively high prices, prospective homebuyers in the DC region are finding a housing market increasingly mismatched to what they’re looking for.

A new study from Trulia calculates mismatch scores for local housing markets across the country, comparing searches of desired home prices to actual listing prices. The nationwide mismatch score has risen from 9.2 to 14.7 over the past year, with 0 representing a perfectly-matched market on a 100-point scale.

The mismatch has risen at a more pronounced clip in the DC metropolitan area, increasing from a score of 4.6 to 11.4 between the second quarter of 2016 and the second quarter of 2017. Both nationwide and in the DC area, this mismatch is primarily due to a glut of luxury homes on the market.

Does the DC Area Have a Mismatched Housing Market?: Figure 2
Overall and subset mismatch market scores and percentages for the DC area

Starter homes in the DC area are the only subset of the market where prospective buyers don’t have many options, with starter homes representing 22.4 percent of listings during the second quarter of the year and nearly 34 percent of the home searches.

The opposite dynamic — almost down to a percentage point — is true for premium homes in the DC area. Higher-priced homes represent 43.8 percent of listings in the second quarter and only 33.7 percent of searches.

“At the same time that premium listings are saturating the market nationally, searches for starter and trade-up are making up a larger share of all search activity,” the report stated. “This is trouble for most first-time homebuyers, especially when put in the context of historically low inventory across all price ranges.”

Trulia’s mismatch scores were gleaned from quarterly search data of Trulia’s for-sale listings. The distribution of each price point in the metropolitan area was weighted based on adding the number of days listings at each price point were on the market. For the DC area, Trulia defines starter homes as those priced below $298,803 and premium homes as those priced above $480,132, with trade-up homes priced between those points.

This article originally published at https://dc.urbanturf.com/articles/blog/does_the_dc_area_have_a_mismatched_housing_market/12995

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