Washington, D.C., is one of our nation’s fastest-growing and most thriving areas. Not only is it the home of our nation’s capital, but it has some of the most exciting facilities in the STEM world.
The city offers rich cultural experiences, excellent schools, abundant job opportunities, and access to some of the most important parks and monuments in our country.
If you’re considering moving to or investing in Washington, D.C. properties, it’s a good idea to know about the market here. Let’s take an inside look together on current market trends. We’ll go over some of the average statistics district wide, and then we’ll close in on the neighborhood details. Are you ready?
Average Home Values
It should come as no surprise that the Washington, D.C., housing market is relatively expensive. While the national average home value is a little more than $316,000, D.C. median listing prices are around $600,000. This works out to an average of $541 per square foot, almost five times the national average.
Perhaps more surprising is D.C.’s median sale price for homes: $675,000 as of this writing. As we’ll discuss more later, D.C. is a major seller’s market right now, and homes are going for way more than the asking price. To date, there are more than 2,000 homes in the market in D.C. ranging in price from $10,000 to $16.5 million, but even that could change as the year progresses.
Market Trends
As with everywhere else, the D.C. housing market has seen a boom in the last year or so. Interest rates dropped to historic lows as a result of the pandemic, tempting more first-time homebuyers into the market than ever. Many investors also took advantage of the low-interest rates to secure rental properties and other real estate opportunities.
This year, we’re starting to see the market frenzy of last summer die down some and the market return to a more normal footing. Some of the trends we’ve seen will continue into the coming months, but in general, prices are coming down and sale times are lengthening. Interest rates are going back up, and bidding wars are slowing down.
Days on the Market
In the last year, we saw houses selling in record time – sometimes in a matter of hours. In May of last year, houses were going from list to closing in 40 days, a historic low for the area. They dropped again last fall to an average of 42 days on the market after rising to 51 average days in September.
With the real estate market slowing down, home sale times are going back up. Right now, homes are spending an average of 53 days on the market between when they’re listed and when the sale closes. Still, that means homes are going under contract in less than two weeks on average, so potential buyers need to be prepared to act fast.
Rising Interest Rates
The primary factor that drove the housing frenzy of 2021 was the low-interest rates. Mortgage rates dropped to 3 percent, the lowest they can be in this country. This provided an opportunity of a lifetime for many homeowners and investors to get their dream property for much less.
However, the advent of COVID-19 vaccines has eased up some of the pressure on the market, and life is beginning to return to normal. Interest rates are now approaching 3.9 percent on average for a thirty-year fixed-rate loan. While this is still a very good rate, it’s not causing the same frenzy we saw during peak season last year.
An Influx of First-Time Buyers
One of the reasons we saw such an increase in demand last year was thanks to the influx of first-time homebuyers. Many millennials have found it difficult or impossible to afford a mortgage for the last several years. The lower interest rates gave them the shot they needed to get into a home for a price that was manageable with their student loans and other obligations.
While rising interest rates are edging some of these first-time homebuyers out of the market, we’re still seeing an influx of new buyers in D.C. This is thanks in large part to the wave of young professionals working in STEM fields. These industries pay well enough that their employees can afford mortgages in the D.C. area.
Continued Inventory Shortage
Although the market is slowing down, it is very much staying a seller’s market. Right now, there aren’t enough homes to go around, which is part of what accounts for the high sale price. Buyers are getting into bidding wars trying to be the person to snag the perfect house when it goes on the market.
That continued influx of new buyers we mentioned is still outstripping new housing production in the D.C. area. We’re not seeing enough homes coming on the market to support the demand as thousands of people look to move into or invest in the Washington, D.C., real estate market.
Continued High Prices
We’ve mentioned that home prices are beginning to come down some as the real estate market slows down, and that’s certainly true. We’re seeing houses selling for closer to list price and general market values declining a little. However, in terms of housing market averages, prices are still high, even for the D.C. area.
In February 2019, homes were going on the market for around $589,000 and selling for about $550,000 on average. Within a year, that price had skyrocketed to a list price of $625,000 and a sale price of $643,000, and by February 2021, homes were still selling around $641,000. The current $675,000 sale price is still well over $100,000 more than the standard market price for homes in the D.C. area.
Rental Market
While first-time homebuyers make up a significant portion of potential buyers today, investors have also been very active in the D.C. market. Renters account for more than half of residents in D.C., and most rentals cost more than $2,000 a month. This can be a very lucrative area for investors who are looking to get involved in the real estate market.
It should come as no surprise that some of the most active rental neighborhoods are around D.C.’s universities. The Foggy Bottom neighborhood near George Washington University and the West End has more than 200 properties available to rent as of this writing. Many of these properties may be apartments or condos, so keep that in mind when planning your purchase.
Capitol Hill
Capitol Hill is one of the more popular neighborhoods in the D.C. area, as well as one of the more affluent. Home prices there average around $900,000, selling for about $615 a square foot. As of this writing, there are more than 300 homes for sale and another 200 up for rent.
Capitol Hill is situated on the southeastern corner of the D.C area, north of the Navy Yard and the U.S. Navy Museum. The neighborhood does offer stupendous access to the U.S. Capitol and the rest of the national mall. In fact, you can walk to the Library of Congress in less than ten minutes, and you can get to the Capitol building in less than fifteen minutes.
Georgetown
Georgetown is by far the most affluent neighborhood in the D.C. area, with homes averaging around $1.6 million dollars there. These homes are relatively large for D.C., averaging around 2,000 square feet at $775 a square foot. There are currently about 80 homes for sale in Georgetown and almost 100 available to rent.
Georgetown is on the western side of D.C. on the north bank of the Potomac River. It’s west of Dupont Circle and Kalorama Heights, as well as the West End. Georgetown University sits within the Georgetown borders, and George Washington University isn’t far.
The White House is a thirteen-minute drive away, and the Tudor Place Historic House and Garden is situated in the district, too.
Columbia Heights
Columbia Heights is a relatively middle-of-the-road neighborhood for D.C., with home prices averaging around $682,000. They list a little below average for the district, with the square footage price sitting just over $600 a square foot. There are currently nearly 300 homes for sale in Columbia Heights and another 200 up for rent.
Columbia Heights is in the center of Washington, D.C., north of Dupont Circle and Downtown. Although it’s a little farther away, it’s a straight shot south to the National Mall, an eleven-minute drive away. You’ll also have easy access to the Smithsonian National Zoological Park and nearby Howard University.
Dupont Circle
Dupont Circle is one of the best-known neighborhoods in D.C, as well as one of the most affordable. Homes here average just $464,000 with a $650 average cost per square foot. As of this writing, there are almost 200 homes for sale and about the same number of rental properties available.
Dupont Circle is in the beating heart of D.C., just north of Downtown and skirting the National Mall. In fact, from some places in DuPont Circle, you could easily walk to the White House or any of the other historic sites on the National Mall. The beautiful fountain at the center of the neighborhood’s namesake traffic circle is also always worth a look.
Petworth
Petworth is something of an upscale neighborhood in Washington, D.C., with home prices averaging around $754,000. The per-square-foot price is around $650, however, meaning you’ll get more bang for your buck. There are a little more than 150 homes for sale, but just 70 rentals on the market.
Petworth is a little north of D.C.’s center, just northeast of Columbia Heights. It’s close to the Smithsonian National Zoological Park, as well as the Basilica of the National Shrine of the Immaculate Conception. And it’s still about a fifteen-minute drive from the National Mall.
Logan Circle
Logan Circle is another of D.C.’s more upscale neighborhoods, with houses averaging a little less than $750,000. Homes here are more expensive per square foot, however, averaging around $675. There are a little less than 200 homes available for sale as of this writing and about the same number up for rent.
Logan Circle is a little northeast of Downtown, just west of Dupont Circle. It offers easy access to D.C.’s Chinatown and is just a few minutes’ walk from the White House and the National Mall. Logan Circle also offers a fabulous old-timey charm that history-lovers will delight in.
Adams Morgan
Adams Morgan is on the affordable side for D.C. neighborhoods, with home prices averaging around $537,000. Homes do tend to be a little smaller, averaging under 1,000 square feet. There are about 100 homes for sale right now in Adams Morgan and only a few more than that available for rent.
Adams Morgan is due north of Dupont Circle and just east of Kalorama Heights. Its northern edge bumps up against the Smithsonian National Zoological Park, making it the perfect spot for animal lovers. There are also other parks in and around Adams Morgan for people who want the convenience of the city and the beauty of a natural escape.
Learn More About the Washington D.C Housing Market
Washington, D.C., has a thriving housing market that currently favors sellers. Houses are selling for over the asking price and for more than ever before. No matter your budget, you can find a home that suits your needs, whether you plan to own or invest.
If you’d like to learn more about the Washington D.C housing market, check out the rest of our site at Nomadic Real Estate. We offer leasing management, sales, and, most importantly, peace of mind.
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