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The first quarter results for the Greater Washington, D.C. real estate market are in and they appear to mirror the uncertainty and nervousness other financial markets have experienced during this same time frame. The market has been nothing short of unpredictable with explosive inventory gains, disappointing unit sales and paradoxically enough, home prices that continue to escalate, albeit it at slightly slower pace than we are generally accustomed to. Tariffs, interest rates, affordability and the general unease with the economy have all lead to what might best be called a tepid market.
Across Virginia, D.C. and Maryland – the core areas we serve, trends remained consistent experiencing similar fluctuations in key market indicators used to measure the health of the real estate market. Of course, there were several outliers that experienced continued growth. The western counties and cities in Northern Virginia (Loudoun Co, Fairfax Co, Stafford Co, Ashburn and Springfield) all showed sustained growth while D.C. experienced some growth especially in the SW Waterfront. The close-in cities and counties in Maryland showed modest increases in home prices but fell well short of the unit sales we have been accustomed to in the past.
Historically, the Greater Washington, D.C. real estate market typically outperforms the national real estate market. However, we are starting to see closer alignment between the two in the metrics mentioned previously. Inventory, nationally rose 5.2% while Arlington increased 5.5%, Fairfax County by 8.3% and Loudoun County leading the way with a 21.4% increase. Inventory levels across DC and Maryland have also risen exponentially. Sales overall were down on both the national and local levels as well. There had been some concerns around the DOGE process of cutting the federal workforce that would lead to homeowners putting their homes up for sale but that has not fully materialized. Return-to-work edicts may be having some impact on increased inventory levels especially in the further reaches of Northern Virginia.
Looking ahead to Q2, there will be a noticeable shift in the balance of the market whereby sellers will need a more strategic approach to marketing their homes-particularly around pricing. Buyers will need to be prepared to move fast and decisively. Though technically still a seller’s market, rising inventory levels and buyer hesitation is creating a more competitive and unpredictable market environment. Buyers will have more options while sellers will need to be open to contingencies, financial concessions and other terms they have been able to avoid over the past several years. Some of this unpredictability can be seen in the stark difference between the multi-offer situations that still occur while many other homes are making price adjustments to be more competitive.
Affordability continues to be a significant impediment to home ownership for many would be homeowners. First time home buyers comprise only about 24-26% of all home buyers, a notable drop from past years. Moreover, cash transactions have declined on a national level from 32% to 26% - a trend our market is experiencing as well. Inflation concerns and everyday living expenses continue to deter some would be buyers but despite these current impediments to home ownership, demand is still strong in our area. Although hesitant, it appears buyers have come to terms regarding higher interest rates and stubborn home prices. Q2 will certainly be a leading indicator as to what we might expect for the second half of the year.
Q1 2025
NORTHERN VIRGINIA
Single family, townhouses & condominiums
ALEXANDRIA ARLINGTON ASHBURN
FAIRFAX CO FAIRFAX STATION LORTON
McLEAN SPRINGFIELD VIENNA
MARKET BALANCE
The market balance is determined by the average months of supply, (all home types) March 2025
Q1 2025
WASHINGTON, D.C.
Single family, townhouses & condominiums
24
GEORGETOWN KALORAMA LOGAN CIRCLE
MARKET BALANCE
The market balance is determined by the average months of supply (all home types), March 2025.
MARYLAND
Single family, townhouses & condominiums*
BETHESDA CHEVY CHASE POTOMAC
ROCKVILLE SILVER SPRING CALVERT
CHARLES CO FREDERICK CO HOWARD CO
MARKET BALANCE
The market balance is determined by the average months of supply (all home types), March 2025.
1701 Duke Street, Suite 100 Alexandria, VA 22314
703-535-3610