May 2025 DC Metro Area Real Estate Market Report Presented by Edward Slavis

Hello and welcome to your Washington DC metro area real estate market report for May of 2025. I'm Edward Slavis with the Slavis Group of LPT Realty and let us begin as always with interest rates. As you can see here from this chart, interest rates are now at 6.8% 30-year fixed and national average. Down a little bit from two weeks ago, a little bit higher than it was two months ago. Really since the beginning of the year, it's been between 7 and 6.75%. When you ask mortgage industry experts their prediction on interest rates, they're really all over the board because there's a lot of uncertainty. This of course is based off of the 10-year treasury yield, which right now is up slightly based upon the last bond market sale. We hope these are going to continue to decrease or will begin to decrease, but to be honest, we just simply don't know. Other caveat of course is 6.8% is the national average. We're still seeing clients about 6.5%. A lot of it depends upon the buyer's credit score, the amount of equity, the purchase price of their home, et cetera. It's not just as straightforward as saying 6.8%. If you're curious as to what you would qualify for, let us know. Happy to introduce you to one of our lenders. Last month, we talked about two frequent doge predictions. These are not all doge predictions. A lot of it has to do with tariffs. A lot of it has to do with just the broader economy. With what's going on in our local economy with lots of job layoffs, we'll just collectively call the cumulative effect of the layoffs and the uncertainty and the tariffs, et cetera, we'll just call that the doge effect. There are two common predictions. The first is that the market's going to correct because there'll be an increase in supply. People are selling their homes because they've lost their jobs, and we have had that happen, or two people selling now before the market crashes. We sold a home two months ago. They were supposed to come on the market in May. They decided they want to come on in March and come on early for fear, again, the market crashing. Anecdotally, we have seen that. The market also could crash because there's a decrease in demand, and that's potential buyers lost their jobs, no longer qualified, qualified buyers who have job security choosing not to buy for fear of the market crashing. I have seen both of these anecdotally. We had buyers that had to drop out of the search for now because they lost their job. Others fully gainfully employed, great security, who just are wanting to rent another year for fear of that correction. Anecdotally, we have seen that. If you talk to any realtor in the area, they've probably seen two, three, or all four of these points here. The question is, are we seeing it in the data? One of the predictions was an increase in new listings. As you can see here, this is the data for April, this rightmost column here, up slightly over March. This is the last five years of data. As you can see, we had a good number of homes selling, maybe 7,500 per month in 2020, upwards of 8,000, 10,000 per month in 2021. Another good strong year in 2022, comparable to 2020. Big drop down in 2023, 2024 was the same. Is 2025 going to see an increase in supply? Again, one of those doge predictions. Right now, we're not seeing it. Last month, if you watched the video, I said, hey, you have an increase of 20% from March of 2025, or from March of 2024 to March of 2025. 2025 was 20% higher. Now, April is more or less exactly the same number of new listings for all the home types in the DC metro area. Almost exactly the same number of homes were listed in April of 2025 as in April of 2024. We're not seeing, as of now, a massive influx in new listings. As far as home prices go, home prices keep increasing. Of the homes that successfully sell, that's a big caveat. Red are detached homes, blue are all home properties, and yellow are condos. As you can see, over the last five years, those homes, those home prices have just continued to climb. You look at the year over year, for the last, at least the last two years, every single month has seen a year over year increase in that median home sale price. The average condo, the median condo, excuse me, that sold in April of 2025 was, looks like about 5% higher than the median condo in April of 2024. The price per square foot looks the same. All those lines are increasing year over year. Everything above that double black line at the zero mark means it's higher than the previous year. Year over year, again, we're seeing an increase in median price and the median price per square foot across detached homes, row homes, or all properties and condos throughout the DC metro area. All of these charts have the big caveat is it varies neighborhood by neighborhood. This is the median. Some neighborhoods, it really is higher. Just as many bidding wars as ever before. No inventory. Every home gets 10 offers. There are other neighborhoods where things are sitting because you have greater months of supply, which we'll talk about in a moment. It varies neighborhood to neighborhood, but as a macro DC market, the prediction that prices would come down because an increase in supply has not happened. There's also a question of the demand of fewer buyers and fewer sales. Here's the last five years of closed sales and broken down blue all home types, red detached, yellow condos. A little bit hard to see, but we saw a lot of homes selling in 2020, increase in 2021, drop back down to 2022. It was on par with 2020, dropped down to 23, even with 24. What's going to happen with 25? Is there going to be another drop down from 25? Right now, it does not look like it. The last two months, we've seen the same number of sales. We saw just as many settlements in March of 25 as we did March of 24. Just as many settlements in April of 25 as we did in April of 24. We definitely do not want to see it drop down. Of course, we want to see it increase, and so we want to see more buyers come to the fray, but remember the prediction was that, or the fear was that buyers would not be able to buy because they lost their jobs, or they were simply worried about the market. Last month, again, we had parity. Condo sales down a little bit, but overall for all home types, more or less on par with last year. Last year was, going back here, this was a slow year for sales, but 2025 thus far is matching it. They're nearly home for home. One thing we do want to keep our eye on, though, is this months of supply. This is climbing up. Months of supply is a measure of the supply and demand. I think you hear me say this every month. I will always see headlines and clients send them to me. There'll be some article on some website like Business Insider that will go and say a thousand new homes were listed in D.C. as a sign that the market's falling. That data is meaningless unless I know how many buyers there are. If you have 10,000 buyers for a thousand homes, you're still in a massive selling market. If you have 10 buyers for a thousand homes, you're in a massive depression. You need both sides of the equation, and that's what we capture here. Month of supply is simply a measurement of how fast buyers are absorbing the inventory. You have 10 homes on the market and five sell per month, you have two months of inventory. Pretty straightforward. The lower the number, the better for sellers. The stronger the seller market, the higher the number, the more inventory available, the better for buyers, the more it's a buyer's market. If you look at the y-axis here, it goes from zero to four. The lower the number, the better for sellers. Anything less than three, certainly anything less than two is a seller's market. Between possibly two, more like three to four to five is a balanced market. Above five is much more of a buyer's market. What you can see is for the last five years, we've had a seller's market. Still only two months of supply. If no new homes were listed, every home would be sold in two months. Condos is now above three months of supply, so that's much more, condos much more into a balanced market. Some will still fly off the shelves. I showed a condo in Colorado to a buyer today. I think that condo will sell very, very quickly without problems. I really believe that. Probably get multiple offers. There are plenty of other condos that are sitting on the market. So you have above three months of supply. In the last four months, we've seen all home types and even detached home types nearly double from one month of supply to two months of supply. That is alarming because we don't want to see it double again to four or five months of supply because that would be a market correction. But if you look at the last 10 years of months of supply, in 2015, I remember that well. In my mind, that was a good, strong market, lots of buyers, lots of sellers, four months of supply. As rates continued to drop, we got down to on average for all home properties, less than one month of supply in early 2022. Rates started increasing March of 22. Now you have back to more supply. But if you look at the blue line, we're just over two months of supply. That's about what it was in July of 2019. And if you had told people in July of 2019, is this a strong real estate market? They would have said absolutely yes. And many buyers were frustrated that everything was leading to a bidding war. We want to keep our eye on this. I do not want to see months of supply climb too high. That would be great for buyers, for those buyers that are in the market. But it means that we have far more sellers than we do than we do active buyers that are absorbing the inventory. So this is the one data point that I really, really want to keep my eye on as a measure of the strength of the market. This is another visual of the last 10 years of closed sales. As you can see, they were peaking out about 7500 per year. In March of 22 rates increase, and all of a sudden, the total number of homes drops, but it's about even for the last two years. We do not want to see this drop off. But again, looking at the 10 year perspective, and give you an idea of where we are the last two years with a total decrease in value. One of the reasons why prices haven't dropped is the number of new listings has fallen and a number of new closed sales has fallen. So both the supply and demand dropped, but the prices are the same and technically actually a little bit higher. So for our two frequent doge predictions, is there an increase in supply? No, it's about equal to what it was last year. Is there a decrease in demand? No, it's about equal to what it was last year. So far, not really is my conclusion. We want to keep our eye on this, and I will be the first to say, it's very difficult to make predictions in this market. I can see that we have a very resilient real estate market. If you were to ask me three years and two months ago, what would happen if we had roughly 7% interest rates peaking as high as 8% for three years, I would have predicted that the market would honestly, I would have, I would have been wrong. We have a very resilient market. So forecasting forward, I have some trepidation. I could imagine a world where resilience wins and prices keep keep climbing higher and higher rates come down, buyers come back in and the market moves along. I can also imagine a world though, where we do actually start to see more and more sellers choose to come to the market, don't find the buyers they want, drop prices, homes do sell, but median prices start coming down. I can imagine that world as well. I always tell people, I'll tell you what happens after it happens. It's easy to look back. It's very, very hard to predict what's going to happen. It's very hard to forecast. So if you hear very, very competent people on TV, I would view that with a heavy dose of skepticism. So what does all this mean for sellers, right? We do not have more homes listed. Prices are up. A number of sales are flat. It is still a fine market to sell. We still have plenty of listings that have come on that we've moved quickly. We do have some that are not moving as quickly. Some of that is by strategy. Some of that, the demand is not as strong as we thought, but we can market and kind of create some demand. If the home is properly prepared, priced and marketed, you will still get the price you want. In fact, homes that are successfully selling now are selling at the highest prices on record. And based on months of supply, roughly two for most home types, it's still a seller's market. The caveat, of course, is it depends upon your neighborhood. If you're curious as to the strength of the market in your neighborhood for your home type, let us know. We're happy to offer you a private consultation. For buyers, there are deals available. I have seen, and we have a few under contract now, of homes that are under contract for $500,000 or $600,000 that three years ago might very well have been $550,000, $650,000, $750,000. There are some deals out there to be had. And you also now, when we're working with buyers, we're always preparing for bidding wars. But in the back of my mind, I'm also thinking in this market, there are plenty of buyers that are going to go and get their home inspection, get their appraisal, get their financing contingencies, all of their protections. They do not need to waive those all because this is a crazy seller's market. For some condos, for some homes, yes, it is. But for many, it's not. There are some deals to be found. Three years ago, when people would say, I want a deal, we used to kind of joke, you're not going to get a deal on the price. You're going to get a deal on the interest rate because you're borrowing money below 3% locking in for 30 years. You'll never see that cheap again. That's your deal. But it's going to be a bidding war with a higher price. Now, it's the opposite. Now, it is a higher interest rate, but we can actually get you a deal on the price. If you work with one of our preferred lenders, you can also refinance at no upfront cost as many times as you like for three years after your purchase. You buy now at six and a half. When it drops down to six eventually, knock on wood, hopefully soon, you refinance. It's five and a half again, refinance. So you'll keep ratcheting down that interest rate over time. If you or someone you know is interested in buying in the area, by all means, please reach out. We'd love to be a resource for them and to walk them through the buying process in this market. So that is your market report for May of 2025 for the Washington DC metro area. Again, I'm Edward Slavis with the Slavis Group of LPT Realty. If you or someone you know is looking for real estate consultation, any real estate needs in the DC area, we'd love to be a resource for you. Thank you and happy Memorial Day. Bye.