Get Ready for a 2021 Real Estate Market That’s Heating Up
Despite the many changes to our lives due to the pandemic, D.C.’s median sale prices have risen to $682,500 as we end the year. This figure is up 13.0% compared to July 2019 and up 5.0% since June 2020. Along with record high home prices, the number of homes sold is up 20.1% year-over-year. Both of these data points suggest that the District’s real estate market is seeing high demand and high activity heading into seasonally slow months. So you may be wondering: What should D.C. real estate agents expect from 2021?
2021 Washington D.C.’s Real Estate Outlook: Heating Up
Home prices are significantly up in the dense District of Columbia with 36.5% of homes selling well above listing price while the average rent decreased by 7.0% year-over-year. 1-bedroom apartments took a big hit as the average rent dropped by 14.0%. This stark difference between home price growth and rent price decay would suggest that more and more residents are looking to become homeowners or are relocating to an area with more affordable rental properties.
Washington D.C., like many hot markets in the country, is experiencing historically low home inventory rates. While this seems concerning, closed sales in October were up 24.3% compared to last year, and new listings were up 25.0% year-over-year. At the beginning of the pandemic, homeowner confidence in listing their home hit all-time lows. But as buyer demand continues to boom despite record-high prices, homeowners’s confidence is also beginning to rise.
The delinquency rate for home mortgages is 7.7%, up year-over-year but down from the second quarter of 2020. "Consistent with the improving labor market and the overall economic rebound, homeowners's ability to make their mortgage payments improved in the third quarter," said Marina Walsh, the Mortgage Bankers Association Vice President of Industry Analysis. These figures, in conjunction with Walsh’s messaging, give some hope that unemployment rebounds will decrease delinquency rates in the future as well as help decrease the current number of homes with negative equity.
2020 Washington D.C.’s Real Estate Market Data
|Zillow Home Value Index||$645,455|
|1-Year Change on Home Values||+2.9%|
|1-Year Change on Rent Prices||-7.0%|
|Homes With Negative Equity||31.6%|
|Delinquent on Mortgages||7.7%|
|Buyer or Seller’s Market||Seller’s|
Market Insights for Washington D.C.
Currently, 6.9% of D.C. residents in the greater metro area are unemployed, which is 3.6% higher than last year. While this rate is high, it’s a slight decrease from May’s unemployment rate of 8.9%. This data point will continue to be a focus for many heading into 2021 as America’s optimism maintains its momentum with the hope for fewer lockdowns on the economy. Thankfully, Washington D.C. is unique in that a high number of residents are government employees who are likely to continue working during the pandemic. D.C.’s location also played a large role in winning the Amazon HQ2 battle. Thanks to the appeal of the city, this win is projected to bring 25,000 jobs to the area with many of the positions requiring high-tech skill sets.
Clearly, Washington D.C. appeals to young professionals and professionals looking to get their hands in politics. This densely populated city, though small in size, is one of the most impactful cities in our country, if not in the world. D.C. is also home to world-famous museums and attractions that draw in millions every year. Here’s how D.C. shakes out compared to the rest of the nation:
- Ranked first in historical cities to visit
- Second in educational attainment
- Third best city for young professionals
- And fifth best city in the U.S.
One constant that agents can look forward to in the next few months is that record-high home prices haven’t dampened homebuyer demand. Virtually all of 2020 has shown that buyer demand is continuing to rise as more and more professionals are able to work from the comfort of their homes. Individuals are looking for more space priced competitively in comparison to what they are shelling out in rent every month. Both home sales and condo/co-op property sales are up year-over-year.
Real estate agents should be prepared for a hot winter season of sales that will push into the spring of 2021. Experts have raised concerns about housing inventory and how that will affect home prices moving forward as well as buyer demand in an extremely competitive market. But as homeowners become more comfortable and realize the opportunities of selling in this market, new listings are expected to increase in 2021.
Take On 2021 With the Best Washington D.C. Real Estate Courses From The CE Shop
Enroll in our Pre-Licensing program now to get your career started and begin connecting your fellow residents with the home of their dreams. Or keep going strong with one of our comprehensive, 100% online Continuing Education packages. Want to stay up to date on everything in Washington D.C.? Join the Mid-Atlantic Real Estate Facebook Group!