As the weather starts to warm up, many people are beginning to think about the exciting prospect of buying a new home. While there are many great neighborhoods in Washington, D.C., it can be tough to know what to expect from the real estate market this spring. In this article, we'll take a look at some of the trends you can expect to see for Washington, D.C. luxury homes in the coming months.
D.C. market trends for primary residence buyers
Single-family
Some good news for home buyers! For single-family Washington, D.C. luxury homes, the median list price in January 2022 was $784,900, down from December’s $1,025,000. The median list price hit a 5-year high in October 2020 at $1,995,000, after which prices fluctuated widely, with the most solid trend between $890,000 to $1,150,000 from April to July. The lowest median list price over the last 5 years was seen in September 2021 at $655,000. While fluctuations in price stems from the limited number of homes for sale, we've seen a greater surge in 2022. Available homes have been on an overall downward trend for the past five years, with the lowest number of listings in November 2021 at just 18! Inventory seemed to bounce back when we saw a surge in January 2022, with 175 available homes, for the first time since June. Buyers and sellers of Northwest Washington, D.C. real estate are sure to appreciate that the median days on the market remain around the three-month point. Median days on the market in December 2021 was 101, up from December 2020’s 85.
Condo/townhouse
Slightly more competitive, with days on the market under three months for the past two months, are condominiums and townhomes for sale in Northwest Washington, D.C. There has been wide fluctuation from the 5-year high of 279 days on the market in November 2021 to 87 in December 2021 and 53 in January 2022. Buyers and sellers should both be pleased with current trends, as it indicates closing can be relatively quick.
Regarding list price, we saw a rise in median list price from March through November 2021 after a 5-year low in March 2021 at $475,000. The latest high was $595,250 in November 2021, and the market has not seen a peak past $675,000 in January 2020. The median list price in January 2022 was $519,900. Condos and townhomes make up the bulk of Washington, D.C. luxury homes for sale, with 1142 homes available in January 2022, up from 2021’s low of 602 in November.
D.C. market trends for real estate investors
If you're interested in investing in real estate, Northwest Washington, D.C. is a great location! With 57% of the market occupied by renters, there's plenty of opportunity. Median rent has fluctuated over the past five years, but 2022 rental price medians are similar to those seen in 2018, with the exception of 4-bedroom units. We've broken down the stats by number of bedrooms to easily find an option that fits any budget.
Studio units of Washington, D.C. luxury homes had a median rent of $1765 in January 2018, a high of $1895 in January 2020, a low of $1536 in January 2021, and an increase to $1865 in January 2022. Based on January 2022’s median, investors can expect to earn up to $22,380 in rental income for studio properties this year.
Northwest, Washington D.C. real estate with 1-bedroom had a median rent of $2275 in January 2018, a high of $2298 in January 2020, a low of $1962 in January 2021, and a rise to $2222 in January 2022. Looking at January 2022’s median, investors can earn up to $26,664 in rental income this year.
For Washington, D.C. luxury homes with 2 bedrooms, the median rent in January 2018 was $2935, with a high of $3103 in January 2020, a low of $2639 in January 2021, and an increase to $2992 in January 2022. Based on January 2022’s median, investors can expect to earn up to $35,904 in rental income for 2-bedroom properties this year.
Northwest Washington, D.C. real estate with 3 bedrooms had a median rent of $3756 in January 2018, a low of $3309 in January 2021, and a high of $3951 in January 2022. Looking at January 2022’s median, investors can earn up to $47,412 in rental income this year.
For Washington, D.C. luxury homes with 4 bedrooms, the median rent in January 2018 was a high of $4500, with a 5-year year-over-year low of $3934 in January 2022. Based on January 2022’s median, investors can expect to earn up to $47,208 in rental income for 4-bedroom properties this year.
Maybe you're looking to get into the short term rental market! If temporary rentals are preferred, the average for one person for one night with a service like Airbnb is $152 a night as of February 2022. Assuming you can host one person per night for the year, or at least 365 guests, you can earn up to $55,480 in rental income this year.
Northwest Washington, D.C.
With 58 neighborhoods in the Northwest section of the district, it would be quite the undertaking to list them all. Instead, we've focused on real estate investment trends for two of the most popular neighborhoods for Northwest Washington, D.C. real estate.
Adams Morgan trends for investors
Real estate investors will be pleased to note that Adams Morgan has a total of 65% of renter-occupied residences. Although no data exists for 4-bedroom properties, and insufficient data exists for 3-bedroom properties, we can examine rental trends for studios, 1-bedroom units, and 2-bedroom units across the last three years.
Studio units of Washington, D.C. luxury homes had a median rent of $1718 in January of 2020, which dropped to a low of $1598 in January 2021, but has increased to a three-year high of $1893 in January 2022. Based on the 2022 median rent for the first month of the year, real estate investors can expect to earn up to $22,716 in rental income in 2022.
Northwest Washington, D.C. real estate properties with 1 bedroom saw an increase across the past 3 years with a median rent of January 2020 at $2,238 which grew to $2,469 in January 2021, and is currently at $2,870 as of January 2022. As such, investors can expect to see a return of up to $32,040 in 2022.
For Washington, D.C. luxury homes with 2 bedrooms, median rent fluctuated in the year-over-year comparison from 2020 to 2022, with January 2020’s median of $3582 dropping to $2911 in 2021 and rising to a high of $3633 in 2022. With January 2022’s median as a base, investors can expect a return of up to $43,596 in 2022.
As for temporary rentals, the average for one person for one night with a service like Airbnb is $160 a night as of February 2022. Assuming you can host one person per night for the year, or at least 365 guests, you can earn up to $58,400 in rental income this year.
Columbia Heights trends for investors
The Columbia Heights neighborhood also enjoys a high percentage of renter occupied residences, which account for 68% of occupied residential property. Investors interested in offering temporary rentals can expect an average of $147 per person per night, which equates to an income of $53,655 with 365 guests. As for traditional rentals, median rent is currently low for studios, 3-bedroom, and 4-bedroom Northwest Washington, D.C. real estate, but 1-bedroom and 2-bedroom properties has seen a slight increase from 2020.
For studio units in Northwest Washington, D.C. real estate, the January 2020 median rent was $1951, which dropped in January 2021 to $1664, and dropped again in January 2022 to $1602. With the current low median rent, investors can expect a return of up to $19,224 in 2022.
Washington, D.C. luxury homes with 1-bedroom have seen a steady increase in median rent over the past three years, rising from $1901 in January 2020 to $1926 the following year and $1933 in January of this year. Based on the January 2022 median, investors can earn up to $23,196 in rental income this year.
Northwest Washington, D.C. real estate with 2 bedrooms has fluctuated in median rent over the past three years, but rent is still higher than it was in 2020. The median in January 2020 was $2818, which dropped to $2544 the following year, before rising to a 3-year high of $2882 in January 2022. With the current median rent, investors can expect a return of up to $34,584 in 2022.
Washington, D.C. luxury homes with 3 bedrooms have a lower median rent than in 2020, but are on an upward trend compared to 2021. The median rent in January 2020 was $3712, which dropped to $3538 in January 2021, before rising to $3622 in the first month of 2022. Based on the January 2022 median, investors can earn up to $43,464 in rental income this year.
Finally, Northwest Washington, D.C. real estate with 4 bedrooms have only slightly dropped in median rent compared to 2020. Median rent in January 2020 was $4750, which dropped to $3974 in January 2021, before rising back to $4700 in January 2022. With the current median rent, investors can expect a return of up to $56,400 in 2022.
In conclusion, the D.C. real estate market is on track to see fierce competition over single-family homes, with inventory remaining low. Real estate investors can expect to see solid returns of tens of thousands of dollars for rental income on Northwest Washington, D.C. real estate.
Success in our hypercompetitive market means staying ahead of the curve, understanding the trends, and applying what’s been learned in real-world situations. Data doesn't lie but it can get pretty convoluted. Luckily, when you work with an experienced agent it isn’t your job to crunch the numbers. Whether looking to sell, buy as a primary residence, or buy as a real estate investment, a local realtor like Larry and Richard at Prigal Brothers & Associates can help you with the process.
