With nearly 38,000 high paying jobs added by Amazon by 2034, along with other indirect job growth, we expect greater demand for housing in the DC Metro area. When this increased demand meets with our low supply of homes for sale, we will likely see home values rise which may be the motivating factor to help increase home turnover and, therefore, increase supply.

According to BrightMLS, the Washington Metro Area’s listing inventory stands at 1.6 months as of March 2019, approaching the region’s all-time low. Contributing factors for this low inventory are related to home prices and monthly payment.

Low home value appreciation has been a drag on DC area housing turnover. Since 2012, homes in the Washington Metro Area have appreciated at a slower pace than the national average. Until late 2018, the home value appreciation rate was the slowest among major metropolitan areas. Many homeowners who purchased at the peak of the market in 2006 are still underwater on their investment (see graph below).

Rising mortgage rates lock homeowners into their current home and mortgage unless they must move for health, job relocation or financial reasons. Our research shows that 40% of outstanding mortgages are below a 4% rate and that a rise of .75 to 1.5 percentage points may cause housing turnover to decline by up to 50%. Since a low of 3.31% (30yr, FRM) in November 2012, rates rose to nearly 5% in November 2018 – a 163 basis point increase.

Retirees are holding onto their homes much longer than the previous generations. Factors contributing to this trend include the above issues plus the lack of available and desirable home choices.