Including whether more homes will ever come on the market.

Are Downtown Condo Sales Getting Any Better?

Not even Vice President Kamala Harris was immune to the condo-market doldrums of the past couple years. She listed her two-bedroom-plus-den in the West End last April for $1,995,000. It didn’t sell until September, when it fetched six figures less than what she wanted. But there’s good news for would-be condo sellers. Even though a lot of folks haven’t returned to the office, all the other reasons for living downtown—great restaurants, fun bars, shopping­—are once again pulling people to the city. Data evaluated by DC’s Office of Revenue Analysis shows that the District’s population is rebounding after a loss of nearly 20,000 residents during the pandemic. Much of the recovery appears to be driven by downtown—i.e., condo-heavy—neighborhoods. Agents say they can feel the shift. Compass’s Trent Heminger, who specializes in condos, describes two listings he had that languished on the market in 2021, one on H Street, Northeast, the other in Columbia Heights. In early 2022, he says, both suddenly got multiple offers. Matt Dewey, chief operating officer of UrbanPace, a condo-marketing firm, says even one-bedrooms—which could hardly be given away—are attracting considerable attention now that younger buyers are returning from living with family during Covid. Plus, says Dewey: “They have more money for a down payment now.”

What’s the Outlook for Our Very Low Inventory of Homes for Sale?

Not great. At the end of 2021, there were 4,138 active listings in Washington, down 38 percent compared with the end of 2020, says Lisa Sturtevant, an economist adviser for Bright MLS. That number of listings equates to little more than a two-week supply—meaning that if no additional homes came on the market, those 4,138 would sell out in that time frame. You can expect more of the same for 2022. In fact, according to Bright MLS, the situation got worse in January, when the supply of homes for sale hit 12 days—a new all-time low. Still, agents say there’s reason for buyers to feel hopeful. Inventory often gets better in the spring. And higher interest rates could lessen demand for the few homes available.

Will Rising Interest Rates Cool Our Market?

Yes, say economists. But while rising mortgage rates mean buyers’ money won’t go as far, one possible upside is that bidding wars could ease as higher rates shake some of the competition out of the market. Another silver lining for buyers: In an already very pricey market like Washington, more expensive borrowing will almost certainly slow the rapid home-price growth of the last couple years. Says Danielle Hale, chief economist with Realtor.com: “We expect the DC area to be particularly sensitive to interest-rate changes.” Before rates tick up even more, expect a flurry of activity as buyers rush to find houses—and lock in rates.

What Will Happen to Apartment Rents Now That Things Are Getting More Normal-Ish?

During the depths of the pandemic, rents in the DC area did something they hadn’t done in years: plummet. Luxury high-rises—whose communal amenities were suddenly off-limits and whose elevators felt like virus boxes—were particularly impacted. As a result, they slashed rents and offered Pelotons and other free gifts to entice new tenants. Unfortunately for today’s apartment-hunters, those days are gone. Brendan Pierce, a senior associate at Delta Associates, the local authority on rental data, says that by mid-2021, “we started to see the market come back to life.” Apartments in the District, harder-hit than suburban rentals, experienced an incredible rebound in the fourth quarter of 2021, with rents increasing by 19.1 percent and the vacancy rate down to 4.2 percent (compared with 10.3 percent in the fourth quarter of 2020). The bargains, in other words, are over.

Source