Back in late March, a five-bedroom brick home in DC's Kent neighborhood hit the market, and a frenzy ensued reminiscent of when 3% interest rates were standard. Over 100 groups came through the open house. Eight offers without contingencies were submitted, and the home ultimately sold for more than $400,000 above the list price.
"The highest offer was actually even higher than that, but the sellers chose to go with a fully cash offer closing in two weeks," Washington Fine Properties listing agent Lauren Pillsbury explained.
A few weeks later in Chevy Chase DC, a similar transaction played out. A home listed for $1.175 million was on the market for just four days before receiving six offers and selling for nearly $200,000 above the list price with no contingencies.
It has been well documented that as interest rates doubled over the last year, the housing market slowed down in most of the DC region. However, with demand far outpacing supply, coupled with homebuyers who can shrug off higher mortgage payments, very competitive scenarios are playing out for single-family homes in the upper NW DC zip codes of 20015 and 20016.
"“Single-family homes, like the ones in zip codes 20015 and 20016, have been in demand throughout the pandemic. Even though mortgage rates have gone up, there are still buyers competing over the relatively constrained inventory," Bright MLS chief economist Lisa Sturtevant said.
The majority of area homeowners don't want to give up their ultra-low interest rates. Redfin recently reported that 62% of mortgage borrowers had rates below 4% at the end of 2022, and 82% had rates below 5%.
The effect of these "golden handcuffs", as The Wall Street Journal calls them, is a much lower availability of homes for sale. Active listings in 20015 are down 33% compared to last year; in 20016, they are down 20%. What hasn't changed as much is the number of buyers in the market.
"We are seeing an incredible number of buyers coming to open houses in 20016 because there’s not much to see," Pillsbury said. "If houses are reasonably updated and priced correctly, they are selling in less than one week, sometimes a couple days, with multiple offers."
The lack of homes for sale in these two zip codes is also pronounced due to the number of homes that are selling off market.
Shari Gronvall of Compass represented the owners of a home in Chevy Chase where there was so much interest that she was able to sell the home off market, getting her sellers all the terms they wanted and a 25% profit compared to much they paid just four year ago.
"Buyers and agents are checking listservs, brokerage pipelines, making phone calls, etc. to find properties not yet on the market and are offering top dollar and ideal seller terms to avoid major competition," Compass' Shari Gronvall told UrbanTurf. “We are in such a supply shortage that I do not see this dynamic changing in buyers’ favor anytime soon.”
This article originally published at https://dc.urbanturf.com/articles/blog/offers_abound_premiums_aplenty_why_two_dc_zip_codes_are_as_competitive_as_e/21039.
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