Q2 2023 Market Report

Market Reports Avi Galanti

Friends and Neighbors,

We are halfway through 2023, summer weather is unmistakably here and so is summer travel! While so many Washingtonians will travel to Europe or escape to the Delaware Beaches, incoming tourism to the DC region is at all time high with the DC Metro area ranking #3 as best summer vacation spot! (yes, it surprised me too).
The real estate market in the DC metro area is alive and kicking, and while we typically expect less activity during the summer months, there’s still plenty of ready and willing buyers out there, looking for that perfect home. Most of the transactions in our area involve local buyers, but there’s also a very healthy pool of buyers coming in from other markets to DC. Our region continuously benefits from positive migration and economic growth, which in turn contribute to a resilient and robust residential real estate market. On that note, at Compass we are proud to announce that we operate in 72 major markets across the United States, as well as hold a strategic partnership with Barnes International, providing us immediate access to 1,300 luxury agents globally and 150,000 international luxury clients.
Back to our local market. You may recall that in my 2022 end of year market report, I concluded that prices and values are stabilizing, not crashing, and I explained the economic factors that support this conclusion. These same factors remain today and with six months into 2023, we can now look at the data from the first two quarters of the year and see what the trends have been.
The information gathered and analyzed below pertain to detached homes only, in Bethesda and Chevy Chase MD. Similar data and analysis is available for NW Washington DC and Potomac MD. Please be sure to contact me if you’d like to discuss specific neighborhoods, price points, condos, or townhomes.
A closer look at first (Q1) and second quarters (Q2) 2023 compared with the first two quarters of 2022 in Bethesda shows that the number of new homes to enter the market (listings) dropped. We see a major decrease – 35% less – in inventory in Q2 compared with the same period in the previous year. The number of transactions also significantly decreased in Q1 and in Q2 – approximately 20% fewer – compared with 2022. The combination of shrinking inventory and a measurable decrease in buyer activity resulted in price stabilization. Another interesting and noteworthy indicator is the Sold Price to List Price Ratio. The data clearly shows that before the interest rate hikes, the ratio, on average, was 106-108%, a rate that declined as interest rates rose.
Assuming no major economic news in the foreseeable future, basically more of the same, we can expect the real estate market to deliver the same outlook for the remainder of 2023 a solid and balanced market for sellers and buyers, no deep discounts, no crazy escalations.
If you happen to be a seller who’s on the fence, waiting for the market conditions to improve such that double digit appreciation return (as was the case in 2020 and 2021), my general advice (not taking into account other subjective circumstances) is to enter the market. Conditions are good for sellers, as long as price expectations are grounded.
For a more personalized strategy and no-obligation valuation of your home, please contact me at 302.906.4996 or email. Thank you and have a wonderful and safe summer!
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