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Winter 2019

03/19/19 by David Howell


2019 Real Estate Forecast - More of the Same?

The Washington, D.C. metro area’s real estate market was strong, but not spectacular, in 2018. In every major jurisdiction, the number of sales was down a bit compared to 2017 and the average sales price was up slightly. And we expect the same for 2019.

As would be expected, this year started with a dip in contract activity because of the partial government shutdown, but we expect to see buyers returning to the marketplace in greater numbers as we move towards spring. We believe that the buying and selling decisions that were put on hold during January and early February were deferred, not shelved. Nonetheless, it will take until the end of the first quarter to see the full impact on our market.



Here’s our look ahead on some key measures for the year ahead:

Mortgage Interest Rates – Until late 2018, most economists were projecting rates to be 5.5% by mid-2019, but now the prevailing wisdom is that rates will hover under 5% through the year. Former Federal Reserve Chair Janet Yellen recently opined that the Fed might even lower rates at some point and while that doesn’t directly impact mortgage rates, it is another strong sign that we should see a stable rate environment. That’s good news for buyers and sellers alike.

Supply – So far this year, every jurisdiction in the region has an overall supply of homes at or less than two months, continuing a trend we saw through much of 2018. Yet there are differences – the number of homes on the market in the Virginia cities and counties continues to decline, while inventory is rising a bit in D.C. and suburban Maryland. We’d be surprised to see supply in any metro area jurisdiction exceed three months at any point in 2019.

Sales and Contract Activity – Only Prince George’s County had an increase in contract activity in 2018 compared to 2017, but despite that increase it still had 4.5% fewer settlements because of its heavy reliance on first time homebuyers. Every other area saw modest decreases in sales and contracts compared to 2017, and we see nothing on the horizon that will significantly boost buying activity. We do believe that there will be more unit sales in 2019, but it is unlikely we’ll see the levels attained in 2017.

Prices – As mentioned above, every area had an increase in the average sales price in 2018, ranging from a high of 3.8% in Prince George’s County to a low of 1.7% in Northern Virginia.  With stable mortgage interest rates, those are very sustainable numbers. Although there will always be pockets that outperform the overall market, we expect that price appreciation throughout the region will be 3 to 5%.

Amazon HQ2 – Amazon will start to ramp up their hiring by midyear, and that will provide a boost to the markets in Arlington County and the City of Alexandria more than any other areas.  But it won’t create an enormous increase in prices – while we are projecting 3 to 5% in the region, prices in the areas closest to “National Landing” may jump as much as 8% in 2019.

After two decades of wild swings in the market, we’ll take a repeat of 2018 anytime. It’s finally starting to look like a “normal” market!


November 2018

11/27/18 by David Howell


Zillow's "Zestimates" Are a Bit Better Than They Used To Be

But They Are Still Inexplicably Bad

We have just completed our fifth and most comprehensive evaluation of the accuracy of Zillow.com’s “Zestimate,” the major calling card for their website. Going back to 2010, Zillow has been able to predict the market value of the homes they evaluate within 5%, high or low, a little over half the time. Evaluating 1,000 properties late this summer, they got that “close” roughly 64% of the time.

Among the reasons for that marginal improvement is that Zillow now has a direct feed from the region’s multiple listing system, giving them more timely and comprehensive information on available and sold listings. Yet Zillow seemingly ignores the most important information of all: the list price of the property, especially when there is a pending contract. 

In the table below, you can see the evolution of Zillow’s estimates – how often they get within 20%, 10% and 5% of the market value – and they have gotten a little better over time. The last two lines show the “outliers,” just how far off the mark Zillow can be. (As an example, in one case in our most recent analysis, the Zestimate was 744% higher than the actual sales price!) The last column is Realtor® pricing, showing how close the original list price of a home was to the actual sales price.

So with just two pieces of information – the original list price and the fact that the property has a pending offer – the consumer can get closer to predicting the sales price than Zillow does. The list price is within 5% of the sales price almost 90% of the time. Zillow’s model is so reliant on their sophisticated algorithms and data scientists that they choose to ignore the power of a seller and their Realtor® evaluating the property and market conditions to decide on an offering price. And if Zillow is this far off the mark when they have list price info, just how far off do you think they are for home that aren’t on the market? 

Why does Zillow produce these estimates of market value? According to their website, “The purpose of the Zestimate is provide data in a user-friendly format to promote transparent real estate markets and allow people to make informed decisions.” We agree with the first part of that statement, but not the second. If the purpose was to help people “make informed decisions,” then Zillow wouldn’t publish such misleading and inaccurate information. The real purpose is to drive traffic to Zillow.com. We get it – that’s the business they are in and they do that exceptionally well. As Realtors®, we live in a world where accuracy and accountability matter, and Zillow doesn’t. We succeed or fail based on our knowledge and service; Zillow succeeds or fails based on their ability to sell leads to agents, and that depends on web traffic. To be clear, we have no problem with Zillow’s business model or the fact that they publish estimates of property values. We simply don’t want people to think they are making “informed decisions” based on these numbers.





Summer 2018

08/17/18 by David Howell


No One Has All The Buyers.

The Perils of "Off-market" Sales

The Washington metro area has a strong real estate market characterized by remarkably low inventory, so we’re a little puzzled by the frequency of “off market” listings – those listings that are not put in the multiple listing system (MLS). One may hear them referred to as private exclusives or pocket listings, but under either banner these are homes that are not exposed to the broadest possible market.

In a market where buyers are clamoring for choices, why would a seller intentionally choose to do that?

There are some perfectly legitimate reasons – convenience, security, privacy – and sellers should get to make those choices. But as with any marketing strategy, there are winners and losers, pros and cons.

When a property is sold by word of mouth, or can only be shown by the listing agent or agents with their company, or simply not marketed in a way that every buyer has a shot at seeing, the seller may be able to get a quick, no fuss sale. If that’s the seller’s objective, so be it. But a “private exclusive” listing – by definition – excludes people.

When supply is tight, does it really make sense to restrict the demand - the number of people who have an opportunity to buy? Because that’s really what these “off-market” listings do. They limit the pool of purchasers. Sellers run the risk of missing a better offer. If the “off market” listing strategy is so wise, let’s take it to its logical conclusion: if every seller and listing agent decided to restrict the availability of their listing, wouldn’t everyone be hurt? Buyers would have nowhere to turn for ready access to every home on the market, and sellers would not have access to all the buyers.

Sellers might be attracted to an agent’s “pitch” that they or their company have the buyer for their home. But here’s the reality: no agent, no company has all the buyers, or even most of the buyers. We see these “off market” listings a bit more often in the luxury market where some may perceive that there are dominant players. In the first four months of this year, there have been just over 1,600 homes sold in the metro area in the MLS for $1,000,000 or more. There were 1,050 different agents from over 300 different companies who brought the buyers to those homes. But is the luxury market all that different? So far this year in Fairfax County, there have been 1,650 homes sold in the MLS between $500,000 and $700,000. Over 1,100 different agents from 350 companies represented the buyers of those homes. In Prince George’s County, 2,500 homes have sold between $200,000 and $400,000, and there have been over 1,500 different agents from 550 different companies.

Before a seller decides to sell their home “off-market,” perhaps the most important question to ask is this: “How many buyers do I want to miss?”




  • The overall number of new contracts ratified in July 2018 was up just 0.5% from July 2017, and there were increases for three price categories.
  • Year-to-date, contract activity is down just 0.5%.
  • 24.6% of all homes going under contract in July had at least one price reduction. 




  • The overall supply of homes on the market at the end of July 2018 was 1.7 months, up slightly from 1.6 months at the end of July 2017.
  • DC has the most balanced supply in the region across all but the highest price category.




  • The average number of days on the market for all homes receiving contracts in July 2018 was 37 days, which remained the same from last July.


Winter 2018

03/13/18 by David Howell


More of the Same?

2017 ended with a bit of a whimper, as contract activity on our region’s real estate market cooled off along with the weather. But it was an overall solid year, with Washington, DC continuing to outpace its suburban neighbors. What’s ahead for 2018?

We’ll put our forecast into three categories: Steady State, the Wildcard, and the Tantalizing Possibility.

Steady State – With inventory in short supply, especially inside the Beltway, we expect 2018 to look a lot like 2017. There will continue to be considerable upward price pressure close-in, but we do not expect the DC market to maintain the 8%-9% annual appreciation rates of the past three years. We think it will be more like 5%, and probably less in the upper brackets. The suburbs will still be strong, particularly as more frustrated buyers look outside the inner city because of prices and inventory. Even with those factors, we’d be very surprised if the appreciation rate exceeds 3% in those areas. And regarding mortgage interest rates, it is almost inevitable that they will (finally) rise as the overall economy improves, ending 2018 around 4.75%. That rate shouldn’t discourage homebuyers.

The Wildcard – With the ink drying on the sweeping tax reform legislation, residential real estate will be impacted in at least three ways. First, with the cap on deductibility of state and local taxes and the diminished value of the mortgage interest deduction for expensive homes, it is likely that upper end home prices won’t increase as much as they would have had reform not passed. Second, the overall tax decreases for most wage earners will put money in their pockets, particularly for millennials who may be thinking about buying their first home. This should help with student loan debt, saving for a down payment, and/or increased spending – and that’s good for real estate. And third, if the economy grows as it did after the Kennedy- and Reagan-era tax cuts, that means more jobs, more income and a much healthier economic climate. Overall, we think the tax reform legislation in 2018 will be a modest, net positive for the region’s real estate market.

The Tantalizing Possibility – Three communities in our region made the short list of 20 semi-finalists for Amazon’s HQ2, with a promise that their final decision will come in 2018. Should one of those three areas be anointed to host 50,000 new employees, acres of office space, and the traffic that will come along with it over the next several years, the whole region wins. Amazon won’t be turning dirt for their second headquarters anytime soon, but the real estate boom for some city on that list of 20 could begin later this year.






November 2017

11/22/17 by David Howell


Absorption Rates and Sell-by Dates

Determining the appropriate list price for a home or figuring what to offer is equal parts art and science. The “art” has a lot to do with the motivation and level of risk tolerance of the parties, as well as the degree of emotional attachment to the outcome. The focus of the “science” has typically been on knowing overall market and financing conditions, and picking the most “comparable” properties to see how the subject property stacks up. Unsurprisingly, there’s a lot more to it than that.

Among the factors to consider are absorption rates and what we call “sell-by” dates. Absorption rates simply measure the percentage likelihood a property will sell in a given month. Absorption rates above 35% are reflective of a seller’s market, and rates below 20% create more leverage for buyers. Anything in between indicates a more balanced market. Sell-by dates reflect how much of the inventory sells before list price reductions are needed. Generally, when homes sell quickly they sell closer to list price, and the discount from the original list price is greater the longer they are on the market. Let’s look at some specific examples.

We analyzed the contract activity for detached homes with a list price of $800,000 to $899,999 from July through October for three communities in the metro area: Great Falls, Virginia, Bethesda/Chevy Chase, Maryland and the Spring Valley/American University Park area of Northwest DC. Great Falls had the lowest absorption rate at just under 20%, meaning that of all the inventory of available homes, only 20% on average sold in a given month. The average number of days a home was on the market before getting a contract was 37. Advantage: Buyers. At the other end of the spectrum, almost two thirds of the available inventory sold each month in Spring Valley/AU Park. The average days on the market was a remarkably low 10 days. Advantage: Sellers.  



The “sell-by” date is the threshold for considering a list price reduction. In Great Falls, homes that sold in 30 days or less sold for an average of 99% of the original list price. Those that sold after 30 days on the market sold for an average of 92% of original list, and almost all had to lower their price before receiving an offer. In Bethesda/Chevy Chase, homes selling in 21 days or less sold for 99% of original list; those that took longer sold for just 94% and all but one had to drop their list price. In the hotter Spring Valley/AU Park market, homes on the market 25 days or less sold for 105.5% of list price, but after 25 days the average dropped to just 94.3%.  Even in this market, 75% of sellers had to drop their list price to receive an offer after their home had been on the market for 25 days.

Despite very different pricing dynamics in these markets, sellers need to understand there is a critical window of opportunity to sell for the highest price. And buyers understand that if they wait for the inventory to “age” a bit, they might be able to drive a harder bargain.



  • The available inventory for October 2017 was up 15.3% from October 2016. Inventory increased for five price categories. 
  • DC was the only area jurisdiction with an increase in inventory.
  • 35.8% of all homes on the market have had at least one price reduction since coming on the market.



  • The overall supply of homes on the market at the end of October 2017 was 1.9 months, which was a 12.1% increase from the supply at the end of October 2016.
  • Nonetheless, Washington, DC continues to have the lowest supply in the metro area.
  • In addition to the lowest overall supply, DC has the most balanced supply in the region across all but the highest price category.




  • Initial pricing strategy is critical to the listing process, regardless of market conditions. The longer a home sits on the market, the deeper the discount to its original list price will likely be.
  • Homes settling in October 2017 that received contracts their first week on the market sold, on average, 2.32% above list. Those that took 4 months or longer to sell sold for 10.13% below the original price.





September - October 2017

09/09/17 by David Howell



Champagne, Baths – and Real Estate

Bubbles are great to have in champagne, baths, and a host of other things, but they are not good for the real estate market.

A real estate bubble generally is caused by unjustified speculation in the housing market that leads to a rapid and unsustainable increase in prices. When it bursts, prices decline quickly – often to levels lower than when the run up in prices began. The whole country experienced a painful bursting bubble almost a decade ago, and its impact was felt far beyond the real estate market.

There is no doubt that home prices have risen significantly in the metro area during the past several years and affordability, especially for first-time homebuyers, is a real concern. But are we in a bubble? The short answer is no.

From 2002 through 2005, home prices in the Washington, DC metro area skyrocketed. Demand was artificially high, driven by ridiculously low “teaser” interest rate mortgages. Prices were up 14% in 2002, 15% in 2003, 20% in 2004, and 21% in 2005. Since mortgage underwriting guidelines were essentially non-existent, more and more buyers rushed into the market to buy homes they could not afford, with the expectation they could cash in their gains later.

When those artificially low adjustable rate mortgages started to adjust and guidelines tightened, demand plummeted. There was a 40% drop in the number of home sales in 2009, compared to the peak in 2005. At the same time, the market was flooded with new inventory as homeowners rushed to sell homes they could no longer afford. With the enormous drop in demand and the jump in homes on the market, prices dropped almost 15% in 2009. Prices only started to head back up in 2012.

None of those supply and demand conditions exist today.

Let’s take a look at demand. There are three basic ways to increase the desire for housing: an upturn in economic activity, an increase in population, and generally low interest rates. To a large degree, all three of those exist today. The region’s economy is doing pretty well, especially in The District. Further, the region has grown by 1,000,000 residents in the last 14 years. Finally, low mortgage interest rates have created an extremely attractive environment for prospective home purchasers, and yet, demand has not exploded. The number of home sales this year in the metro area will be virtually identical to the number that sold in 2003. There have been significant demographic shifts – people are waiting longer to marry and form households, and student loan debt makes it harder for many to buy their first home. And despite those low interest rates, it is harder to qualify for a loan. In short, demand is reasonable, and it not being fueled by speculation.

On the supply side, inventory of available homes is at a historic low. Just as buyers are waiting longer, homeowners are staying put longer. Nationally, the median number of years sellers have been in their homes has risen from six years in 2000 to 10 years today. New construction isn’t keeping pace with household formation.  

Low inventory has certainly contributed to increasing home prices, but even in the hottest market area in The District, annual appreciation rates have been between 6% and 8% during the last three years. It is far lower in the suburbs. If demand were greater, the lack of inventory would have pushed prices much higher.

Markets seek balance over time, as long as they are not artificially stimulated or restricted. The hottest areas in our region are due for an adjustment because 6%-8% appreciation isn’t sustainable forever. In our more suburban markets, current appreciation rates are in line with historic norms. And we know that eventually, mortgage interest rates will climb, and that will ease some of the upper pressure on home prices. We believe the inevitable market adjustment will come in the form of lower appreciation rates, not a drop in prices.



The following tables track absorption rate by property type, comparing the rates in the just-completed month to the rates in the same month of the previous year. The absorption rate is a measure of the health of the market, and tracks the percentage of homes that were on the market during the given month and in the given price range that went under contract. [The formula is # Contracts/(# Contracts + # Available).] An example: The absorption rate for Condos/Co-ops priced $500,000-$749,000 in July 2017 was 41.4%; that compares to a rate of 40.9% in July 2016, and the increase means the market was better in 2017 for that type of home. If the absorption rate was less in 2017 than in 2016, we have put the 2017 rate in red. This month there was improvement for 9 of the 18 individual price categories – but DC still has the highest absorption rates in the region.



The overall absorption rate for condos and co-ops for July was 37.6%, a slight decrease from the 38.1% rate in July 2016.
The absorption rate for condos across most price ranges is more balanced in DC than anywhere else in the region.


The overall absorption rate for attached homes for July was 42.0%, which is slightly less than the 42.6% rate in July 2016.
Again, look at the balance across most price ranges.



July 2017’s absorption rate for detached homes was 32.3%, an increase from 30.3% in July 2016.
And the balance among the price ranges is evident here as well.


May-June 2017

05/17/17 by David Howell



As millennials are entering their prime as homebuyers, they are feeling the pinch between very low inventory for entry-level priced homes and rising interest rates in the metro DC market.

Contrary to much of the conversation these days, the overall inventory of homes is not at a record low. At the end of April 2014, there were almost 5% fewer fully available homes than there are right now. However, a huge shift of the price range of homes on the market has occurred.

In April 2014, 45% of all homes on the market were priced less than $500,000, and homes in this price category constituted 67% of all sales. Today, just 33% of homes are priced less than $500,000, and the percentage of total sales has dropped to 62% of the market.

No question – inventory is down significantly from this time last year, but the decreases have not been evenly distributed. While overall inventory is down 15%, the number of homes priced less than $500,000 is down 26%. But there are 3% more homes available priced more than $1,000,000.  

In the suburban markets, the differences are even starker. In Northern Virginia and Loudoun County, there are 32% fewer homes priced less than $500K than last year, and Montgomery County is down 23%.

It isn’t just the scarcity of inventory facing millennials – or any other first-time buyer – that makes this a challenging market. Mortgage interest rates are about a half point more than they were in November, making homes slightly less affordable. And ironically, those higher rates are contributing to the relative paucity of new listings coming on the market. In our robust sellers’ market, one might expect there would be a significant jump in the number of sellers taking advantage of very favorable market conditions.

However, new listings are up only 2% in the metro area year-to-date compared to the same time last year. Plenty of homeowners who purchased or refinanced in the last few years and locked in sub-4% mortgages are in no hurry to sell their homes. The prospect of giving up those very favorable rates, only to face the prospect of buying a home in a tight market at higher rates, is keeping people in their homes longer.

Another factor preventing many millennials from buying homes is student loan debt, and that’s certainly not unique to the Washington area. In their “Student Loan Debt and Housing Report – 2016,” the National Associations of REALTORS® found that, among those who are current in their debt repayments, 71% of non-homeowners cite student loan debt as the factor delaying them from buying a home. The level of debt impacts both their ability to save for a down payment, as well as their debt-to-income ratios to qualify for a mortgage. The delay in buying a home among non-homeowners and homeowners alike is five years.

So, buyers of entry-level homes are truly feeling the pinch of low inventory and higher interest rates.  Nonetheless, perspective and patience are both virtues.  Mortgage rates are still extraordinarily low from a historical perspective, and markets seek balance over time. Millennials and anyone else can be successful buyers with planning and persistence.



  • The available inventory for April 2017 was up just 0.8% from April 2016. Inventory increased for four price categories.
  • DC was the only area jurisdiction with an increase in inventory, even though that increase was very modest.
  • 31.0% of all homes on the market have had at least one price reduction since coming on the market. 




  • The number of new contracts ratified in April 2017 was down 8.8% from April 2016, and there were increases for two price categories.
  • As noted on page 3, contract activity year-to-date is up 3.9%.
  • Only 20.3% of all homes going under contract in April had at least one price reduction.  




  • The overall supply of homes on the market at the end of April 2017 was 1.4 months, up slightly from 1.3 months at the end of April 2016.
  • Nonetheless, that’s the lowest supply in the metro area.
  • In addition to the lowest overall supply, DC has the most balanced supply in the region across all but the highest price category. 






March-April 2017

03/30/17 by David Howell



It finally happened – after years of speculation and expectation, mortgage interest rates have climbed since the national elections in November.

During the past forty years, the interest rate for 30-year fixed rate mortgages has averaged 8.2%. From the beginning of 2000 through 2012, the average was just under 6.0%. But from early 2013 until mid-November of last year, rates averaged an astoundingly low 3.8%. It’s a funny thing – when rates stay low for an extended period of time, people get used to them, and also tend to forget that they couldn’t stay that way forever.



In the weeks after the election, rates moved from 3.5% to 4.3%, and have since floated between 4.0% and 4.2%. To be sure, mortgage interest rates are still very low, but potential homeowners have lost about 6% of their purchasing power in just a few weeks. The monthly principal and interest payment on a $400,000 mortgage in early November was roughly $1,800. A borrower getting that same mortgage today would pay $1,925.

So a big jump in a short time is a market killer, right? In fact, at least on the short term, exactly the opposite is happening. Many buyers who have been sitting on the fence have decided to purchase before rates go much higher. During the past three months, contract activity is up 12% compared to the same time period a year earlier. This uptick in activity may seem counterintuitive, but it is what we have always seen when rates rise.

From May to August 2013 rates jumped a full percentage point from 3.5% to 4.5% – but contract activity rose 13% from the same time in 2012 when rates averaged 3.6%. It is also likely that, given the recent action by the Federal Reserve Chair raising its target rate, mortgage rates will continue to trend higher through the rest of 2017.

We’re not suggesting that rising rates are good for the real estate market, and there is no doubt that higher rates will price some out of the market and prompt others to lower their price point. Yet rising rates are not a huge negative either, at least in the short term. It is important to view these increases in a broader context. The fundamental reason that rates are climbing is that the national economy is improving. And that means household income is rising, the job market is improving and more people will be in a position to buy.

We’d like to offer one more bit of historical perspective. When John McEnearney opened the doors to our company in July 1980, mortgage rates stood at 12.0%. One year later they were 17.0%. That’s right: 17.0%. And people still bought houses. To be sure, it was a lot tougher, but owning a home was just as important then as it is now.



  • The available inventory for February 2017 was up 8.8% from February 2016. Inventory increased for the top three price categories.

  • 29.2% of all homes on the market have had at least one price reduction since coming on the market.




  • The number of new contracts ratified in February 2017 was up 9.6% from February 2016, and there were increases for all price categories.

  • Contract activity year-to-date is up 15.2%.

  • Only 23.8% of all homes going under contract in February had at least one price reduction. 




  • The overall supply of homes on the market at the end of February 2017 was 1.5 months, the same as the supply at the end of February 2016.

  • That’s the lowest supply in the metro area.

  • In addition to the lowest overall supply, DC has the most balanced supply in the region across all but the highest price category.




November - December 2016

12/04/16 by David Howell



With the number of fully available homes on the market near record lows for this time of year and with fewer new listings coming on the market, is there any relief in sight for buyers who are frustrated by their lack of choices? And why aren’t more sellers taking advantage of this low inventory by putting their homes on the market?

We don’t see any relief on the horizon. There are really only three ways to create a net increase in inventory. The first is new construction, and while construction permits have increased, there is an estimated shortfall of 50,000 units over the next 5 years just to meet new household formation. The second way inventory increases involves investors selling units that they have been holding as rental properties. With rents rising faster than home prices, there is no market pressure for that to happen. And the third way is homeowners leaving the area and selling their residences. While there is always emigration from the metro area, we are still attracting more people than we are losing.

We’re not minimizing the impact of current homeowners who sell and buy another home in the area, but that doesn’t create a net increase in inventory. On top of that, the current low inventory climate actually discourages some from moving. While they may be confident they can sell their current home, they lack confidence they can find their next one with relatively few homes on the market.



There is another undeniable fact that is keeping a lid on movement by existing homeowners: people are staying in their homes longer than they used to. In their 2016 Profile of Home Buyers and Sellers, the National Association of REALTORS® reported that the median number of years a seller remained in their home was 10 years. From 1987 – 2008 it was just six years. That is a seismic shift. A large part of that jump is the simple fact that many could not move even if they wanted to during and after the crash of the real estate market that started in 2006. But even as equity has returned to the overwhelming majority of the nation’s homeowners, they just aren’t in a big hurry to sell.

Economist Elliot Eisenberg summed up the impact of this demographic trend in a recent post: “The percentage of Americans that moved fell to an all-time low of 11.2% in 2016 from a peak of 42% in the early 1950s. Numerically, moving activity topped out in 1984 at 45 million and has steadily fallen to 35 million today, the same level as in 1962.” The population of the United States was 186,000,000 in 1962; today it is over 324,000,000.
When people don’t move as often, inventory is going to suffer.

The Washington area is certainly more transient than the nation as a whole, but we’ve seen our “seller tenure” change as well. In 2000, the median number of years a seller was in their home was 6.5 years. So far in 2016, it’s 8.5 years. We know this period of tight inventory won’t last forever, but there are some fundamental reasons it won’t change any time soon.




  • The available inventory for October 2016 was down 7.5% from October 2015.

  • Inventory increased for two price categories.

  • 34.1% of all homes on the market have had at least one price reduction since coming on the market.




  • The overall supply of homes on the market at the end of October 2016 was 1.7 months, which is a 6.5% decrease from the supply at the end of October 2015.

  • That’s the lowest supply in the metro area by almost a month.
    In addition to the lowest overall supply, DC has the most balanced supply in the region across all but the highest price category.




  • Initial pricing strategy is critical to the listing process, regardless of market conditions. The longer a home sits on the market, the deeper the discount to its original list price will likely be.

  • Homes settling in October 2016 that received contracts their first week on the market sold, on average, 2.7% above list. Those that took 4 months or longer to sell sold for 7.1% below the original price.



September - October 2016

09/02/16 by David Howell



32,000 jobs. Theoretically, that is how many are up for grabs in this town in our quadrennial election cycle, and that much potential turnover has to have an impact on the real estate market, doesn’t it?

Let’s take a look at the Executive Branch. Regardless of the outcome, there will be a change in the occupant of the White House, and there are roughly 3,000 presidentially appointed jobs. Let’s assume the every one of those jobs changes and a considerable number of lower level staff positions change along with them. That could be as many as 8,000 jobs. The reality of Washington’s political job market is that many who will fill those jobs already live here. People cycle in and out of public sector jobs with considerable frequency. But let’s be generous and estimate that half of those 8,000 jobs will be filled by people who relocate to the metro area. Let’s also assume that half of those will buy homes sometime in their first year here. Although our experience tells us that is a dramatic overestimate, that would be 2,000 home sales.

There are 24,000 jobs on Capitol Hill, but close to 9,000 are considered “non-partisan” and generally do not change with election cycles. So, the “political” staff on The Hill numbers about 15,000. But even with 435 House and 33 or 34 Senate seats on the line each election cycle, there is usually not an enormous amount of turnover. In 2014, 95% of the members of the House running for re-election won. 41 members retired - and their party kept the seat in each and every case. There was a significant change in the Senate, however, with a net change of 9 seats. 2010 saw the biggest party change in recent memory with a 15% change in the House and a 16% change in the Senate. So, if we take an extreme example and assume we have another major “change” election like 2010 with a 15% turnover in Congress and also assume that there was a 100% turnover in the staff of those newly-elected members, that would translate to 2,250 jobs changing hands. Most staff jobs on Capitol Hill pay less than $50,000 per year, and many newly elected officials look for rental housing or even live out of their offices. As is true with the Executive Branch positions, some of the people who will fill the new Congressional staff positions already live in the Washington area. But we’ll apply the same logic ñ let’s assume that half of the new hires come from out of town and half of those buy a home sometime in their first year in town. That would be about 560 home sales.




How much impact would 2,500 additional home sales have on our market? There were slightly more than 50,000 home sales in the immediate DC metro area last year, so that would be a 5% increase. But as the table shows, there is no historical correlation between home sales and election results. On the heels of the major changes in the makeup of Congress in 2010, the number of sales in the immediate DC area fell almost 5% the following year. The election of 2008 brought a change in the White House and a change of 29 seats in Congress. There was an increase of almost 20% in the number of sales in 2009 compared to 2008 - so on the surface one might be tempted to say these elections had a major impact on the region’s real estate market. However, in February of 2009 Congress passed and the new President signed into law the first round of the Homebuyer’s Tax Credit, and the number of sales jumped nationally, too. 

As we have discussed many times, there are other significant factors at play in the real estate market. Individuals do not make a decision to purchase a home in a vacuum. Just moving to the area to take a new job - even a new job on the Hill or in the Executive Branch - does not cause an individual to ignore overall market conditions or their personal circumstances. Also remember, that while there may be new occupants of these jobs, these are not “new” jobs like those we see created when a company moves to the area. National elections may make a big difference when it comes to policy, but not to the local real estate market.


MarketWatch Archive for Washington DC



  • 30-year fixed interest rates at the end of July averaged 3.48%, compared to 3.98% at the end of July 2015.

  • One-year adjustable rate mortgages were 2.78% at the end of July 2016, which is up from 2.52% at the end of July 2015.



  • A $1,000 principal and interest payment supported a loan of $223,250 at the end of July, which is $13,282 more than July 2015 and $57,880 more than July 2004.

  • Just after the market’s peak in July 2006, it would have taken a monthly PI payment of $3,068 to purchase a median-priced home. Today’s lower rates have had a dramatic impact ñ now it takes a payment of $2,292 to buy a median-priced home. That’s a 25.3% decrease.


  • Initial pricing strategy is critical to the listing process, regardless of market conditions. The longer a home sits on the market, the deeper the discount to its original list price will likely be.

  • Homes settling in July 2016 that received contracts their first week on the market sold, on average, 2.29% above list. Those that took 4 months or longer to sell sold for 12.98% below the original price.