Looking forward to 2025, we’re expecting to see continued strengthening of the DMV real estate market, though there is also some uncertainty related to the incoming presidential administration and Congress.
The economists at our regional Multiple Listing Service have issued some projections for the DMV for 2025. Among the key points, they’re expecting:
- An increase in home sales of 7.9%,
- A 14% increase in the number of listings on the market, and
- A 4.7% increase in median sale price.
Another important factor is mortgage rates, and the latest projection from the Mortgage Bankers Association suggests the average rate for a 30-year fixed mortgage will be hovering in the mid 6s throughout 2025. In 2026, they expect that rate to edge down slightly to 6.3%.
Regarding the impact of the incoming Trump administration and Republican-led Congress, there is still a lack of specifics about their priorities and their plans for implementing them. Economic experts, including Fed Chair Jerome Powell, are saying that it's too early to say how their policies will affect economic activity and interest rates. The same is true for the local real estate market. On the one hand, some policies could add steam to the market. For example, a mandate for federal workers to return to the office would likely increase buyer demand in the DC area, as homes that are closer to offices become relatively more attractive than homes farther out of the city. On the other hand, some policies could have a dampening effect. For example, economists generally regard significant tariffs as inflationary, and the Fed could respond to inflation by increasing the Fed Funds Rate. That would likely lead to higher mortgage rates. Similarly, a significant increase in federal debt could translate to increased yields on the 10-year Treasury bond, which also tends to correlate with increased mortgage rates. While politicians made a lot of claims during the election about dramatic changes in Washington, DC, similar claims have been made in past decades by previous administrations, and the reality is that, for good or bad, significant changes to the federal government and federal budget are easier said than done. For helpful background on this, see this recent episode of The Daily.
How this all plays out remains to be seen, and we’ll continue to track the latest in the DC area real estate market. Please feel free to reach out with any questions!
