October 2019

While Metro DC enjoys moderate-to-strong demand fundamentals, sales have slowed due in part to weakening consumer confidence. Single-family permit activity declined in Virginia and Maryland’s outer submarkets while multifamily permit activity booms in the District. Affordability remains strong in the region with low interest rates that follow years of low home value appreciation.

Job Growth

Moderate: DC Metro’s employment growth rate slowed 0.3 percentage points from July to August. For the 12 months ending in August, the metro area added 34K jobs for a 1.0% annual rate. The growth rate slowed from July’s 1.3% pace, or 42K jobs.  Northern Virginia’s job growth remains stronger than the Maryland suburbs and should be evaluated by corridor when studying individual properties.

Permit Growth

Weak: Single-family permit volume slowed in the outer markets while multifamily permit activity continues to be strong.  Compared to same period last year, MF permits rose 31%, from 11,734 to 15,353, while SF permits declined 6.4% from 13,626 to 12,750.

Employment-to-Permit Ratio

Moderate: A 0.9 E/P ratio suggests that the market is at risk of becoming oversupplied with MF permits filling much of that demand.  However, with low existing home inventory, new homes and the rental market will be in demand and the E/P ratio may dip below 1.0 without affecting home values.

Housing Inventory

Weak: We see a seasonal increase in the month-supply of listings to 2.0 months and below the 2.5-month level recorded the same months in 2018. Listing inventory dropped 17% MOY, or 3,200 listings, while sales pace dropped 5% MOY. Inventory differs by submarket and price band and should be evaluated carefully for your specific project.  Please call us for a detailed inventory and demand analysis for your specific project.

Existing Home Sales and Prices

Moderate: Existing home sales are flat, due in part to the low inventory levels. Median sales prices have increased from $377K average in 2018 to $384K average for the past 12 months.  Low mortgage interest rates will help increase sales by keeping homes more affordable. Sales volume will differ by price band and by submarket and should be evaluated alongside a market depth analysis.  Please call us for a detailed supply and demand evaluation for your specific project.

Affordability

Strong: While national home price appreciation slowed significantly over the past two years, DC’s prices remain stable at around 2.5% to 3.0% annual appreciation due to slow wage growth in the MSA. We expect the slow home value appreciation over the past few years will limit the risk of Metro DC going through a major housing cycle downturn.