“Hey, Britt! How’s The Market?” Part 1: Sotheby’s Mid-Year Review

It has been an eventful year for both buyers and sellers as they navigate through our current all-time-low inventory market. This week, we will take a closer look at how our local market has performed in the first half of the year, as well as the continued trends and factors influencing the real-estate landscape in the Washington, D.C., metro area.

The 2023 Mid-Year TTR Sotheby’s International Realty Market Review

The first half of 2023 witnessed a shifting market from the boom years of 2020, 2021, and the first half of 2022. Throughout the Washington, D.C., metro area, stubbornly high mortgage rates affected both buyers and sellers. Buyers found affordability to be the primary issue, with the costs of purchasing and maintaining a home to be significantly higher than in recent years. 

On the other hand, many sellers were able to lock in low mortgage rates before inflation and the end of the Federal Reserve’s quantitative-easing strategy sent rates soaring in mid-2022. For example, 62 percent of U.S. homeowners have a mortgage rate below 4 percent, and 24 percent have a rate below 3 percent. Homeowners are reluctant to give up their low mortgages, and, as a result, are staying in their current homes much longer. This has kept the inventory of homes for sale at five-year lows in 2023 across the DMV.

The scarcity of homes for sale in the first half of 2023 had two major effects. First, prices have remained steady even though demand has ebbed slightly. While there are variations across each individual submarket, prices across the metro area remained flat in the first half of 2023 when compared to the same period in 2022. Second, with less inventory, the total number of transactions fell 25 percent in the first half of the year.

The second half of 2023 will, for the most part, be contingent on mortgage rates and the strength of the regional economy. Inflation appears to be moderating, and this will lead to lower mortgage rates and an increase in inventory over time. With that said, assuming the regional economy remains healthy, there is still pent-up demand from buyers who are holding out for lower rates.

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Next week, we will continue to look at the factors influencing changes in our market and explore what makes this summer different from the past few years. Whether you are in the market to buy or sell a home, understanding your neighborhood's market dynamics is crucial. We are here to be that valuable resource for you! Connect with us below or subscribe to our weekly newsletter to stay up to date on new listings, open houses, and community and real-estate news.