Now that 2024 is in our rear-view mirror, it is clear that the road was anything but smooth—but we made it through. While the markets we serve performed reasonably well, the year was marked by anxiety and uncertainty. Rising home prices, tight inventory, fluctuating interest rates, compensation lawsuits, election-year instability, consumer confidence concerns, and inflation fears all shaped the real estate landscape. Despite the challenges, most jurisdictions saw positive results, particularly in the fourth quarter (Q4).
The Greater Washington, D.C. Metro area finished the year strong, with Q4 proving to be a major driver of 2024’s success. Northern Virginia saw impressive gains, with average home prices rising by 7.8% across the region. Loudoun led the way with a 10.1% increase followed by Fairfax County with a 9.4% increase, and Prince William County at +7.5%. Most cities within Northern Virginia registered significant price increases, though Arlington County had the only negative number for the fourth quarter but still finished with a respectable growth of 5.8% year-over-year (YOY). These Q4 numbers contributed to some solid year-over-year home price increases and a strong uptick in unit sales. However, the days on market (DOM) showed mixed results across the region.
The DC market as a whole saw positive performances, with Q4 average home sale prices rising by 7.8% and a 7.3% YOY increase. Unit sales increased by 11% in Q4, although they were down -7.7% for the year. Home prices continued to climb in neighborhoods throughout the city, but unit sales and DOM varied depending on those neighborhoods. Montgomery County mirrored trends seen in Northern Virginia, with average home prices increasing by 6.9% in Q4 and 6.5% YOY. Unit sales surged by 22.2% in Q4, though they saw a smaller 4.4% increase overall for the year. Meanwhile, Prince George’s County delivered a steady performance, with average home prices rising 4.5% YOY and unit sales following suit with a 4.5% YOY increase. Days on Market (DOM) remained flat compared to last year at 26 days. The markets in Calvert, Charles, and St. Mary’s Counties showed positive results in most metrics, though unit sales remained a challenge in these areas.
Nationally, 2024 was not a banner year for real estate. Home sales dropped to their lowest levels since 1994, with only 4.06 million homes sold. New construction also saw a decline, from 1.4 million units in 2023 to $1.35 million in 2024, exacerbating the shortage of available homes. Rising interest rates continued to limit access for many potential buyers, while cash buyers made up nearly 31% of all transactions, putting additional pressure on those requiring financing. Meanwhile, rents remained stable across most markets, with slight increases in some areas, further complicating the ability to save for a down payment.
Looking ahead, 2025 is expected to bring a continued favorable outlook for the DMV real estate market. Supply is projected to increase, and home prices are expected to rise by around 4%. Interest rates should remain in the 7% range, though they may fluctuate. However, affordability will remain a key issue for many would-be homeowners, so 2025 is likely to remain a renter’s market for a significant portion of the population.
That said, strong demand should help offset these challenges, and unit sales are predicted to rise once again in 2025. The recent federal “return to work” mandate could influence housing demand in the DMV, especially among those seeking proximity to the capital or those that may wish to forego the traditional work culture thus providing additional housing opportunities. The promise of fewer construction regulations (as promised by the current administration) could also help ease the supply shortage. Lastly, luxury home buyers have been increasingly focused on the DMV, drawn by its proximity to the federal government and the new administration.
One potential concern is the growing presence of large investor firms coming back to the market, purchasing single-family homes for rental purposes. This trend could make homeownership less attainable for many, particularly among Gen-Z individuals, who may forgo the traditional “American Dream” of homeownership in favor of renting.
While the future remains uncertain, the predictions for 2025 are positive, and our regional markets have historically been somewhat insulated from broader national and regional trends. Sellers can look forward to a strong market, as buyers begin to realize that the current market conditions may persist for the foreseeable future.
