With the government shutdown in the rearview mirror, we were curious how the market fared in February. And it probably won’t surprise you that, since all real estate is local, there were some considerable differences.
The partial government shutdown that started right around Christmas and extended through almost all of January undoubtedly put a squeeze on the metro DC real estate market.
We took a look at absorption rates – the pace at which the market is absorbing” the available inventory – in January and compared those to rate the previous January, and there is an inescapable conclusion: the market was slower.
Bubbles are great to have in champagne, baths, and a host of other things, but they are not good for the real estate market.
A real estate bubble generally is caused by unjustified speculation in the housing market that leads to a rapid and unsustainable increase in prices. When it bursts, prices decline quickly – often to levels lower than when the run up in prices began. The whole country experienced a painful bursting bubble almost a decade ago, and its impact was felt far beyond the real estate market.
There is no doubt that home prices have risen significantly in the metro area during the past several years and affordability, especially for first-time homebuyers, is a real concern. But are we in a bubble? The short answer is no.
As millennials are entering their prime as homebuyers, they are feeling the pinch between very low inventory for entry-level priced homes and rising interest rates in the metro DC market.
Local Real Estate News
Why a Brexit could mean lower interest rates for homebuyers (via UrbanTurf DC)
- Buying and selling your home: Which comes first when you’re looking to move?, featuring McEnearney CIO David Howell (via U.S. News)
- In D.C., more homes are selling and at higher prices (via Curbed DC)
- Lyft and GM are expanding their car rental program into D.C. (via recode)
- Apartheid’s urban legacy, in striking aerial photographs — An American used drones to capture the color lines still stark in South African cities. (via CityLab)
All indications point that the spring market of real estate has arrived: contracts and inventory are both up — but as the old adage goes, the more things change, the more they stay the same.