2024 Real Estate Market Report

Welcome 2025, and Happy New Year to all! As we begin a new year, it’s hard to believe that the first quarter of the 21st century is already behind us. 2024 was a year for the history books, marked by head-spinning events both at home and around the globe—some of which had a very real impact on the real estate market as buyers and sellers adjusted to new realities. Indeed, data shows that existing home sales in 2024 were the lowest since 1995. However, towards the end of the year, following the presidential elections, we began to see encouraging signs of increased buyer activity, even as interest rates remained around 6.5%.

I have been tracking real estate data and trends in the D.C. area for nearly 20 years, and if there’s one thing I know for certain, it’s that all real estate is hyper-local. Beyond that, real estate trends vary based on property type and price point. In these reports, I aim to bring you the most accurate and relevant data for our specific market, broken down into "bite-sized" segments that I hope you find insightful and useful.

The pre-presidential election atmosphere in 2024 introduced a layer of uncertainty that significantly influenced buyer sentiment in the residential real estate market. This hesitation stemmed from a combination of factors, including economic volatility, fluctuating mortgage rates, and concerns about potential policy shifts post-election. As a result, many potential buyers adopted a cautious approach, contributing to a noticeable slowdown in market activity. In the Washington, D.C. metro area, this uncertainty was especially pronounced, given that the federal government is the region's largest employer. Specifically, the stated intention to downsize the federal workforce could significantly affect a sizable portion of local government employees.

On the flip side, post-election, we’ve seen a few high-profile real estate transactions in D.C., primarily ultra-luxury home purchases by billionaires seeking proximity to the new administration and the President’s inner circle. While these transactions are certainly noteworthy, their impact on the broader market remains limited.

Before we dive into the data, a word about interest rates, which were stubbornly holding above 6% for most of 2024. The Federal Reserve cut the benchmark interest rate three times last year, by a total of 1%. These cuts made borrowing for loans, credit cards, and auto financing cheaper, but not so for home mortgages. This is because mortgage rates track more closely with 10-year Treasury bond yields, which, for now, remain high. While the Federal Reserve is expected to lower the benchmark rate by another 50 basis points in 2025, mortgage rates are expected to remain around 6.5%. It is important for buyers to consider the rising prices of real estate year-over-year (as data shows) rather than waiting for rates to drop. Eventually, when rates do come down, homeowners can refinance, while buyers who continue to wait will face higher prices and lose time on the financial benefits of homeownership, particularly first-time homebuyers.

Single Family Homes Continued to Appreciate in 2024, Though Modestly:

While 2024 may not have been a standout year for real estate nationally, homeowners in Bethesda, Chevy Chase, Potomac, and NW D.C. have still seen an increase in property values. For instance, the median home price in Bethesda rose from $1.431M in 2023 to $1.480M in 2024, a 3.4% increase. Over the past five years, the median home value in Bethesda has surged by an impressive 46%.

In Chevy Chase, MD, although the number of transactions dropped nearly 20%, the median home price still saw a 6.6% year-over-year increase and a 40% rise over the past five years since 2019.

Looking ahead to 2025, I predict that a growing number of buyers will enter the market, spurring a surge in demand. With inventory remaining limited, home prices are likely to continue their upward trajectory.

24 Years of Positive Value Appreciation for Homeowners! 

Since the end of the Great Recession of 2008-2009, homeowners in the DC Metro area have seen their home values continue to grow, some years (Covid-19 years) better than others, but overall a welcomed increase of equity and wealth in real estate.

Different Price Point, Different Story: 

Real estate is hyper-local and also hyper specific. The type of real estate and price point can also influence buyer behavior and trends. It is no surprise that the entry-level price point of detached homes in Bethesda-Chevy Chase continues to increase. The availability of homes under $1M is shrinking at a stunning pace, as I pointed out in previous reports. In 2019, 643 homes have sold up to $1M compared to only 100 in 2024, a drop of 85%! The buyer-pool in this price range is large and the significant imbalance of demand vs supply will continue to drive up prices as a result.

In contrast, the upper bracket market continues to expand rapidly. In 2019, the number of detached homes sold in all of Bethesda-Chevy Chase over $2.5M was only 100, compared with 189 in 2024, nearly double.

However, in 2024 the buildup of inventory of luxury homes offered for sale ($3.5M and above) was rapid as demand stalled in Q3 and Q4 for various reasons I discussed at length in my “Fall Luxury Real Estate Market Report” published at the end of October 2024 (please visit my website to read in full). The sudden drop in demand was felt significantly among the real estate community including home builders, architects, brokers, and of course, sellers. Purchases in the upper bracket price point are typically considered “of choice” and not as “a necessity” (from the buyers' perspective) which makes buyers in this category more susceptible to moods driven by societal-anxiety and volatile economic outlook.

It is my belief and my hope that in 2025 most of the core reasons that held back would-be buyers of luxury real estate, will make room for less anxiety and paralyzation and more positive economic outlook and therefore a return to “normalcy.” Thankfully, we already started seeing a positive shift in December 2024.

New Construction Home Market:

In 2023, there were 71 new, in-fill homes in Bethesda and Chevy Chase combined that were listed for sale on the MLS. This figure does not include custom homes contracted privately. When custom homes are included, the total number of new homes in 2023 rises to 142, according to tax records.

The average sold price for these homes was $2.568M. (Note: This number excludes homes offered for sale in Amalyn, Toll Brothers' new neighborhood development in Bethesda).

In 2024, the number of new in-fill homes listed on the MLS increased to 90, a 27% rise compared to 2023. The average list price was $2.720M, while the average sold price, so far, stands at $2.491M, a slight decrease of 3% year-over-year. This decrease is not unexpected, as rising land acquisition costs along with increases in labor and materials costs have driven the average price of new homes in Bethesda up by approximately 34% over the past five years since 2019.

As of the time I am writing this report, 36 new homes are currently listed for sale in Bethesda-Chevy Chase. While the availability of new home inventory may seem high, I anticipate that demand for new homes will be stronger comparatively in 2025 and the absorption rate will increase (meaning more of the inventory is sold).

Luxury Condo Market:

In 2024, 76 new luxury condo listings entered the market in Bethesda and Chevy Chase (refer to the list of condo buildings included in this report), with 57 condos going under contract. The average sold price was $1.65 million, and the median sold price was $1.42 million. Condos sold in an average of 49 days, and the average price per square foot (SF) was $808.

In comparison, 2023 saw 68 new condo listings—about 11% fewer than in 2024—and 53 contracts were signed. However, 2023 yielded a higher average sold price of $1.689 million and a higher median sold price of $1.5 million. The average price per SF in 2023 was $827, which is $19 more per SF than in 2024.

Looking at five-year data, the average price of upper-bracket condos in 2019 was $1.406 million (an increase of 17.35% by 2024), while the median price was $1.2 million (an increase of 18.25%). The average price per SF in 2019 was $685, and in 2024, it stands at $808, reflecting an 18% increase.In contrast, the single-family home market in Bethesda saw a more significant increase in value, with an average rise of over 42% during the same five-year span.

It is also worth noting that the last luxury condo buildings constructed in Bethesda and Chevy Chase were The Cheval in 2018, which featured 71 condominiums, and The Ritz on Connecticut Avenue in 2022, with only 65 condos. Meanwhile, luxury rental apartment buildings are emerging rapidly throughout Bethesda at a remarkable pace.

Condo buildings included in this report: Somerset, Ritz, Darcy, Adagio, Lionsgate, Cheval, Edgemoor on Montgomery Lane, Edgemoor on Arlington, Hampden Row, The Lauren, and Stonehall.

In closing:

Looking ahead, 2025 has the potential to be a strong year for real estate. The DC Metro area continues to experience low unemployment, steady growth, a positive influx of talent, some of the best public and private schools in the country, and high household incomes. With the new Administration and Congress in place, the region will continue to attract corporations, law firms, lobbying firms, top talent, and power players—factors that will impact the real estate market and drive prices higher across the board.

Thank you for taking the time to read this report and for your continued support of our small business! We wish you and your loved ones a happy, healthy, and prosperous 2025. Should you have any real estate needs, please don’t hesitate to reach out—we’re here to assist and provide reliable, exceptional guidance.

Best wishes,

Avi