Fall 2024 Luxury Real Estate Market Report

Dear Neighbors,

The ultra-luxury real estate market in Washington, D.C., Maryland, and Northern Virginia is rapidly expanding. Despite its relative youth, this market faces intense competition among sellers who must adopt innovative and proactive marketing strategies to differentiate their properties and attract buyers. In 2024, buyers hold leverage in the ultra-luxury market due to increased property availability. Sellers should emphasize unique selling points, personalized marketing approaches, and exceptional property presentations to capture the attention of discerning buyers.

As I write this report, there are 28 detached homes for sale in Bethesda and Chevy Chase priced between $3 million and $5 million, along with 18 homes above $5 million, totaling 46 properties. The growth of the luxury and ultra-luxury home segments in Bethesda-Chevy Chase is remarkable. Year to date, 89 homes have been listed over $3 million, and this number is expected to increase in the last quarter of the year.

In comparison, only 43 homes were listed over $3 million in 2020—29 in the $3 million to $5 million range and 14 priced above $5 million. This signifies dramatic growth, with listings more than doubling in four years. However, this unprecedented supply is facing a demand that has not yet materialized.

In the past 90 days, only 4 contracts have been signed for homes priced at $3 million and above in Bethesda-Chevy Chase (3 in the low $3 million range and 1 in the low $4 million range). If this trend continues, the gap between supply (46 homes) and demand (an average of 1.3 contracts per month) will widen, putting pressure on sellers to lower prices to attract buyers.

It’s important to note that the current pace is unusually low and may be a temporary setback. Year-to-date, a total of 40 contracts have been signed for homes priced over $3 million, with 36 in Q1 and Q2 compared to just 4 in Q3.

Several factors may have contributed to the significant drop in contracts from Q2 to Q3 in the luxury real estate market, including:

• Seasonality - The real estate market often experiences seasonal fluctuations. Q3, encompassing the summer months, tends to be slower as families take vacations and buyers may postpone major decisions until after the summer break, resulting in a temporary decline in contracts.
• Economic Factors - Broader economic conditions—such as high interest rates, inflation concerns, market uncertainty, and the upcoming presidential elections—can influence buyer confidence, particularly in the high-end market where purchases are often discretionary. Changes in financial markets may prompt buyers to reconsider large investments.
• Buyer Sentiment - Luxury buyers are typically more cautious and sensitive to perceived market shifts. With an apparent oversupply of luxury properties, potential buyers may be waiting to see how the market develops, contributing to slower transaction activity.
• Market Saturation - The significant increase in homes priced over $3 million has provided buyers with more options than in previous years, leading to longer decision-making processes and fewer urgent transactions.

The Silver Lining
Despite a slower market, the strong demand observed in Q1 and Q2 suggests that once the first transaction occurs, it could trigger a surge in activity. Whether the market rebounds in Q4 2024 or Spring 2025 remains to be seen, but with the Federal Reserve signaling a continued decrease in interest rates, stable economic news, and the elections behind us, buyers are likely to become more active. I believe the downward pressure on pricing will likely ease over the coming months.

As always, please do not hesitate to reach out with all of your real estate questions. It will be my pleasure to offer my guidance and services and tailor a plan to your goals and needs. 

Avi