Illustration: Brendan Lynch/Axios
Higher interest rates will cause the housing market to continue its cool down in 2023, following the trend we’ve seen in recent months.
Why it matters: Buyers and sellers will find themselves on a more even playing field as D.C.’s market nears more balanced pre-pandemic conditions.
What to expect: A “reset of expectations,” says Harrison Beacher of the Greater Capital Area Association of Realtors, as everyone accepts that the intense bidding wars we saw early in the pandemic are a thing of the past.
- High interest rates will mean less competition as fewer homebuyers enter the market. As a result, homes will continue to take longer to sell, giving buyers more time to make decisions.
- Sellers will try to stay competitive through moderate price reductions, and being more open to negotiation, TTR Sotheby’s International Realty senior vice president Maxwell Rabin tells Axios.
- More homes are expected to come on the market in the next few months, but the region will still have a low-inventory problem.
Between the lines: The 2023 landscape is a return to normal that not everyone wants. Buyers are longing for low interest rates, and sellers are kicking themselves for missing the early pandemic frenzy.
Be smart: Some buyers are waiting for interest rates to go down before they start their home search. “That’s not necessarily going to be the most advantageous strategy,” says Zillow senior economist Nicole Bachaud. “If you’re trying to wait for the best market, you’re going to be waiting for a really competitive market again.”
- Rabin says sellers shouldn’t expect “to get what someone else got for the same type of product a year ago. It’s just not going to happen.”
The bottom line: This year’s market will be more stable, Bachaud says, giving buyers and sellers more time to plan ahead with the confidence that conditions aren’t expected to significantly change.