What to Expect from the Washington DC Housing Market in 2022

Like many areas throughout the U.S., the housing market in Washington DC has been experiencing a wild ride throughout the pandemic. Prices have been record-breaking with listings attracting dozens of offers and buyers regularly paying well over asking.

The popular Georgetown neighborhood, known for its upscale shops that line cobbled streets, has seen the biggest increases, with the median sold price between January and October 2021 at $1.5 million, a 32 percent increase over 2020. It's not the only neighborhood with serious competition and sky-high prices. In Cleveland Park, an agent reported that his client put an offer in that was over half-million dollars above the asking price and still lost it to someone willing to pay more.

While the number of sales and prices in DC experienced a dip last summer, inventory of available homes has remained extremely low, which means more competition in the market and higher prices, something that's expected to be a problem in 2022 and the foreseeable future beyond.

If you're looking to buy one of the Washington, DC houses for sale, that's obviously not the best news, but sellers are likely to reap big rewards for some time to come. 

The Better News: More Moderate Price Increases

While prices will continue to increase, real estate experts say they will be more moderate, with gains in the DC area expected to be at 3.8 percent in 2022 and approach 3.6 percent by the end of the year. Of course, even modest price increases will make it impossible for many first-time buyers to purchase. DC, however, will be less affected due to the many higher-earning professionals in this market. 

Lack of Homes

The biggest challenge in DC and throughout much of the country is inventory. New listings in October in the metro market were down 16 percent from last October. Some potential sellers who could make big profits off their homes are holding off because they can't find another place to buy.

The low inventory makes it even more challenging to get new inventory because if you want to sell and stay in the area and there are no homes for sale where you want to be, you can't sell.

The lack of homes for sale is expected to ease soon but not by much. Experts say the supply of homes for sale in 2022 will increase by only 0.3 percent and millennial demand for homes will keep the supply limited at least through 2025.

Increasing New Construction

As homeowners who've put off selling because they can't find another home to buy start to put their homes on the market and an increase in new construction feeds into that more positive trend, things will start to cool down.

First, builders' pipelines will have to catch up to the typical balance of under construction and not yet started homes vs. those that are already completed.  Recently completed homes have made up just half the usual share of new homes for sale and brand new homes are only viable for those who can wait for the construction process to finish.

What does this mean for buyers and sellers?

The best advice one can use for buying housing or real estate is to always stick to a realistic budget and know what you can afford. This avoids panic buying and you get better assurance with your choice.