For years in the DC region, home prices have been headed in one direction: up. But as the market has cooled in recent months and interest rates have been on an upward trajectory since the beginning of the year, there's a good chance that prices will flatten out and likely start to drop in the coming months.
For an expert opinion on this subject, we reached out to Dr. Lisa Sturtevant, Bright MLS' chief economist:
Home price growth has slowed considerably in the Washington, DC region as interest rates climbed over 6%. With the latest figures showing rates approaching 7%, market activity will undoubtedly continue to be slow. Low inventory should sustain stable prices across much of the DC region, but there are some local markets where we could see year-over-year price declines for the first time since the Great Recession.
In August, the median sold price in the Washington metro area was $555,000 which was 3.4% higher than a year ago. The pace of price appreciation has slowed compared to the double-digit price growth we saw during much of 2020 and 2021. The region’s median price is now more than $100,000 higher than it was three years ago—a 22% gain.
There will be a period of price correction in the region, as sellers are adjusting price expectations. During the last week of September, more than 60% of sellers in the District of Columbia had dropped their asking price. Expect price growth to be relatively flat during the last few months of the year, with the biggest risk of actual price declines in places where prices ran up more quickly than the metro average, including Prince George’s County (+29% over the past 3 years), Loudoun County (+28%), and Frederick County (+38%).
This article originally published at https://dc.urbanturf.com/articles/blog/what-could-happen-with-dc-area-home-prices/20149.
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