The COVID-19 pandemic has affected nearly every sector of the global economy. Real estate has been hit especially hard, with demand for properties reducing and prices falling. This has further led to widespread economic consequences in different places. As a homeowner in Washington, D.C., you may be wondering how the economic slowdown caused by the disease has affected your property’s value. A clear understanding of the health of this housing market can help you make smart decisions.
Here is what you need to know in terms of the property market in these uncertain times.
Washington, D.C. Housing Market Overview
The D.C. real estate market had more home sales in January and February, 2020 compared to the monthly averages from the previous three years. Home sales stood at 700 in January and went slightly higher in February. However, when the housing market began contracting, only 530 homes were sold in March.
The D.C. Real Estate Market Before COVID-19
A look at the pre-COVID situation in the D.C. market will help you understand how the crisis has affected your home value. Like every other real estate market, the Washington, D.C., housing market has experienced its fair share of ups and downs. However, the region had been recording an impressive bull market run before the outbreak of COVID-19. The nation’s capital was on the path to recovery following the global recession that lasted from December 2007 to June 2009.
Prices continued to rise, and both pending and closed sales increased significantly with every passing year. Homes also sold faster as buyer activity increased in the market. This post-recession growth was largely attributed to strengthening values. The comparatively lower inventory and higher prices during this period favored sellers.
The D.C. property market usually heats up in the spring and summer months. During this time, the area attracts families looking to enjoy the favorable weather before the fall, when the school year picks up again. In addition to supply, the number of buyers who enter a real estate market has a significant impact on the power dynamic in the housing market.
Traditionally, D.C. has been shifting towards higher mortgage loans. This is an indication that buyer preference has been increasingly moving towards more expensive homes. There is also a good chance that most of the buyers active in the market have not been first-time buyers. When it comes to location, neighborhoods that surround the D.C. metro area are progressively favoring buyers. Going slightly outside D.C. gives buyers more options to choose from and allows them to enjoy the benefits associated with less competitive markets.
When the pandemic broke out in mid-March, the seasonal incline of the housing market has just begun. People tend to buy homes after major life events such as getting married, getting children, relocating to start a new job, and when looking to downsize for retirement. In D.C., home prices continued to rise, and properties were selling for the full asking price even after the pandemic was declared a public health emergency in March. However, the subsequent stay-at-home guidelines announced in early April were accompanied by declining pending sales and dropping new listings. In May, the regional housing market started showing signs of improvement as buyers, sellers, and real estate agents turned to technology and embraced virtual tours.
The uncertainties that the coronavirus pandemic brought about were bound to reorder the D.C. real estate market. However, compared to other markets across the country, the property market in D.C. reacted quite differently.
How the Pandemic Impacted Home Values
The pandemic drastically changed the way we live and how we do things. To understand the real impact of COVID-19 on home values, we look at the market effects of the pandemic as well as the practical implications.
Stay Tune for Part Two….