Rates, Prices, Jobs: The 3 Charts That Will Define The DC-Area Housing Market

• January 6th 2023

by UrbanTurf Staff

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Today, UrbanTurf is taking a look at what we think will be the three metrics that will determine the direction of the DC-area market in the coming months.

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The path of interest rates over the last 8 months had a direct effect on the path of the housing market and that will remain the case for the foreseeable future. This week, 30-year mortgage rates approached 6.5%; last year at this time, long-term rates were averaging 3.22%. If rates continue to rise, the pace of home sales will remain slow. If they fall, homebuyers will be more inclined to get off the sidelines. 

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For years, home prices in the DC region only seemed to go up. As the market changes, that is no longer the case. While DC-area home prices were up 1.4% in November, it was the slowest rate of year-over-year appreciation since 2018. Home prices fell in DC proper, Arlington and Alexandria, and regionwide, the median home price in November was 9% lower than the 2022 peak. While it's impossible to predict their path, a home price correction could help offset the effect of rising interest rates. 

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From Dr. Lisa Sturtevant, Bright MLS' chief economist:

Right now, the job market is pretty resilient, even as the Federal Reserve has raised interest rates aggressively over the past 12 months. If the labor market continues to be strong, that bodes well for a strong housing market. However, if the labor market weakens (i.e. job losses, unemployment rates up), the housing market could also be weaker. The DC area tends to do better than other places during economic downturns, but the labor market is still key to watch.

This article originally published at https://dc.urbanturf.com/articles/blog/rates_prices_supply_the_3_charts_that_will_define_the_dc_area_housing_marke/20472.