After more than a year of interest rate hikes, the real estate market in 2023 is certainly different from early 2022, but one thing remains the same: The low inventory of homes for sale means it’s still a sellers’ market. The frenzied market of early 2022, when sellers would receive dozens of offers and sell extremely quickly, is behind us. Yet well-priced homes often still get multiple offers, and prices continue to rise, particularly in the D.C. region suburbs.
A recent report from Bright MLS explains:
“In July, the median sales price in the Washington, D.C., metro area was $590,000, a 4.8% rise from a year ago and the biggest year-over-year increase since June 2022. Prices are rising faster in the region’s suburban markets, where housing is slightly more affordable. While buyers may be active, sellers are still very much on the sidelines. The number of new listings coming onto the market in July hit a more than two-decade low and tracked 34.4% below last year’s level. Overall, across the region, there were just 5,731 total active listings at the end of July, down 29.3% from a year ago and less than half of the inventory that was on the market prior to the pandemic.”
This sellers’ market is likely to continue for many years. In fact, the 2021 National Association of Realtors report Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing explains that the level of home construction has lagged below historic levels for two decades, creating the serious housing shortage we have today.
To bring housing supply back in balance with demand, NAR maintains that construction would need to rise to 1.5 times the historic average. But that may be difficult with high interest rates and potential economic challenges, such as recessions. As a result, it could be decades before housing supply and demand balance.
So, while no one can discount the possibility of prices dipping at some point, prices are likely to continue rising over the long haul, leaving sellers in the driver’s seat.
