The D.C. metro area is in constant motion. But beyond the excitement of Capitol Hill, tourism, and local sports and entertainment, our real estate market has plenty of movement, too. DMV real estate has been hot for decades, even remaining fairly steady compared to other areas of the country during key market downturns. And while 2020 had a nationwide shakeup, now that we’re a few years out of it, it’s interesting to see what’s changing and what isn’t.
As we consider our local real estate, there are two key trends getting plenty of recent coverage nationwide: housing affordability and supply. Here’s a quick look at how our area stacks up, based on recent findings from the National Association of Realtors.
Affordability
While the DMV is a large metro area, for the past 30 years or so, its overall housing costs have been fairly high compared to other areas in the country. However, when you look at the historical data for the two primary states (Maryland and Virginia), the Association’s Affordability Index continually shows a decent affordability on the general scale.
When looking at year-over-year progressions, we can see a very slight shift as of April 2024 with homes being slightly less affordable than in recent years.
The index looks at housing affordability on a scale of zero to 1.0, with a higher number showing better affordability. As of May 2022, Virginia was listed as .74 and Maryland as .86. However, as of April 2024, Virginia is listed as a .70, a .04 decrease, while Maryland shows a .78, a .08 decrease. This would signal that these two states are becoming slightly less affordable. However, what makes these numbers truly interesting is how they compare to the shifts contextually in the rest of the country.
In May 2022, the most affordable states in the country included Ohio (.98), Iowa (.97), and Kansas (.92). As of April 2024, the most affordable states are Iowa (.89), West Virginia (.88), and Ohio (.87). Inflation has been hitting many people hard, and these nationwide shifts are a great example of how and where. While two of the most affordable states from 2022 remain in the nation’s top three this year, the index numbers have decreased more than in our area. With headlines lately hitting on nationwide home affordability, it’s perhaps no surprise, but it’s a trend that those looking to buy a home should continue to watch.
Supply
Housing supply has also been a frequent topic in recent years, with a housing shortage present throughout our area and the nation. Interest rates have more people staying in their homes longer, particularly among homeowners who were able to secure interest rates below 3% before they quickly began to rise.
Within our area, we are starting to see improvements. At the midpoint last year, a new single-family home permit was being pulled for just one out of every five jobs. However, the latest numbers show a new permit is now being pulled every 2.19 jobs in the DMV, with the Association’s map listing our area as having a sufficient supply. This is a drastic improvement for our area.
