Washington, D.C. is a wonderful place to live. From its proximity to the political hub of the country to its beautiful scenery, it’s a favorite location for many would-be home buyers. Not only that but in Washington, D.C. you’re close to other popular destinations and metropolitan centers like New York City.
For those who want to be part of the action without having to live directly in it, Washington, D.C. has gorgeous suburban options, as well. This variety makes the nation’s capital a highly sought-after market for buyers.
But purchasing a home involves more than the mere selection of a property and its subsequent purchase. Even though Washington, D.C. offers a wealth of options for home buyers, there are still a number of factors to take into consideration when choosing a home to purchase there.
To make sure you’re getting the best possible deal on your new home, it’s critical to have at least a basic understanding of market-related trends and factors such as timing, taxes, closing costs, the market you’re interested in, and other information pertinent to successfully purchasing a home.
Whether you’re buying your first home or your tenth, this guide can help you find the best property for your budget in Washington, D.C..
The first step any prospective home buyer should make is to partner with a buyer’s agent in their local market. Working with an objective professional can help you benefit from expert advice right from the beginning so your home buying experience is as successful and fruitful as possible.
How to Find a Washington, D.C. Buyer’s Agent
The first step that any would-be home buyer should take is to find and partner with an experienced, local real estate agent. An experienced, local agent with in-depth knowledge of the market you’re looking to purchase in can help offer support and guidance throughout the often complicated home buying process.
What’s more, your real estate agent can be an advocate for you. This is especially important when it comes to the critical task of negotiation. When you find the property you’ve always wanted, it’s important to have someone at your side who knows what you’re looking for but who is objective enough to provide constructive feedback, as well.
Making sure you have a buyer’s agent with experience can also ensure you get the best deal and find the most success when purchasing your Washington, D.C. dream home.
The real estate market can vary greatly between cities and, in some cases, even between zip codes. Having an experienced real estate agent at your side who is familiar with the local market can ensure that you have an advocate during the entire process. It’s particularly necessary to partner with a real estate agent who is good at negotiating and who understands your chosen market inside and out.
Clever can instantly connect you with top rated buyer's agents in your chosen market. This can help you save money since all Clever Partner Agents work on a flat fee basis.
You should get in touch with a Clever Partner Agent today for a no-obligation consultation.
Learn More: What Does a Real Estate Agent Do for a Buyer?
Washington, D.C. Housing Market Forecast for 2019 - and Beyond
On average, Washington, D.C. is a great market that provides excellent opportunities for home buyers. The median home value in Washington, D.C. is $579,200. The median listing price is $584,900 and Washington, D.C. has experienced a one-year growth of 3.8%. The market also has a one-year forecast of 3.0% growth.
What’s more, the average home spends 83 days on the market, which gives you just enough time to make a decision without feeling rushed but also without having to wait too long to land the keys to your new dream home.
It’s also worth noting that through February 2019, 11.1% of homes in D.C. were listed with a price cut. This is a positive indication that you might be able to find some great discounts. Of course, any money you can save during the process can only help to improve the entire experience and make it easier for you.
What’s more, the fact that the home values are only expected to rise means you can expect to see a decent appreciation on your home in the coming year.
Best Time of Year to Buy a Home in Washington, D.C.
Choosing the best time to purchase a home comes down to a combination of inventory, competition, and discounts.
Shopping for a home when there’s a large selection of properties available ensures you have enough selection. Choosing a month where competition is decent but not at its highest can also help you achieve success when you go to make an offer.
Of course, whenever you can find a discount, that always helps. For that reason, picking months that historically see a higher percentage of homes with discounts can also help you score a great deal.
Highest Number of New Listings
It’s not necessarily a deal breaker if you can’t purchase a new listing, but if you’re able to shop when there’s a higher number of new listings on the market it can help to increase the selection at your disposal.
In the D.C. metro area, March, April, and May are the months where you’re most likely to see the highest number of new listings. In March, on average, there are 10,600 new listings, in April there are 11,800 new listings, and in May there are around 10,200 new listings.
Most Competitive Months
The months that tend to be the most competitive in this region are March, April, and May, as well. March sees about 27.5% of homes selling above list, while April and May see 27.5% and 24.5% respectively.
This means that you’ll want to avoid these months, if possible since you’ll be facing a large amount of competition and good deals will be harder to find.
Months with the Highest Inventory
May, June, and August have the highest inventory available. In May, there are usually around 29,000 homes on the market, August sees around 30,000, and June wins the inventory battle with 32,000 homes on the market.
Purchasing when the inventory is high gives you the most opportunity and the greatest selection.
Months with the Most Discounts
Finally, the D.C. metro area has the most discounts in June, July, and September. In June, about 17.8% of homes have discounts, in July that rate is 17.7%, and in September, 17.2% of homes are discounted.
Given the above data, June is historically the best month to buy in D.C.. Not only will you be able to enjoy the most discounts and the highest inventory, but you’ll avoid the competition of March through May, as well.
Learn More: When Is the Best Time to Buy a House?
Calculate Your Property Taxes in Washington, D.C.
Property taxes are calculated based on the assessed value of your property, which includes both the land itself and any buildings that are on top of it. The assessed value is usually tabulated by the tax assessor every five years. Once the assessment of your property is complete, the new tax rate will be effective, and you’ll see the new rate reflected on your bill.
Property taxes are calculated in one of two ways. Either your area will use a mill levy or it will use the assessed property value.
The mill levy uses the measure of a mill, which is 1/10 of a cent. In other words, for every $1,000 of assessed property value, $1 is equivalent to one mill.
The tax levies for each individual jurisdiction are calculated individually. Once all the individual calculations are done, the levies are combined in order to determine the regional mill rate, or the number of mills your area will be charged.
If the assessed property value is used, the correct amount of property tax is calculated by multiplying the mill levy by the assessed value of your property. In most areas, the assessed value is defined by the reasonable market value for your home.
In Washington, D.C. specifically, the effective real estate tax rate is 0.55%. Annual taxes on a $194,000 home would total $1,055. The state median home value is $537,400, and the annual taxes you would expect to see on a home valued at the state median would be $2,930.
However, taxes can vary widely from region to region. Each county tends to have its own unique tax rate, so you can be looking at completely different rates just by moving over a zip code or two.
Given the variability of these rates, it’s important to consult with your real estate agent about the property taxes you can expect to pay on your new Washington, D.C. home. Doing so will help you avoid any surprises when you go to make an offer and complete the purchase.
Learn More: How to Calculate Property Taxes
How Much Are Closing Costs for Home Buyers in Washington, D.C.?
Yes, property taxes can be hefty, but it doesn’t end there. You’ll also have to figure out what your closing costs will be before you sign on the dotted line and purchase your new home. Closing costs are a necessary part of the home buying process, so it’s important to understand at least the basics so you’re not caught off-guard.
Closing costs can include any number of items, but for the most part, there are two major types of closing costs. The two most common distinctions are between non-recurring closing costs and recurring closing costs.
Non-recurring closing costs include things like endorsements, escrow fees, transfer taxes, home protection plans, real estate agent commission, lender fees, and notary and wire fees.
Recurring closing costs include things like fire insurance premiums, property taxes, mortgage and mutual insurance premiums, and other types of insurance premiums.
In general, buyers can expect to pay 3% of the sale price of their home in closing costs. Given that the median home value in Washington, D.C. is $545,000, that means that you can expect to pay $16,350 in closing costs on average.
You’ll also have to pay a transfer tax of about 1.1%, which is around $5,995 on that same value of $545,000. Additionally, Washington, D.C. charges a mortgage recordation fee. While the transfer fees in D.C. are usually wrapped into the closing costs, the mortgage recordation fee might not be.
If it’s not, you could be looking at another $5,995.
However, fees and taxes vary on a state, regional, and even local level, so it's important to consult with your real estate agent and allow them to guide you through the entire process to make sure you haven't missed anything.
Learn More: Who Pays Closing Costs on a House?
Clever Will Help Pay Your Closing Costs!
Closing costs are an unfortunate part of the home buying process, but you don’t have to be stuck with all of them. Fortunately, there are rebates available in most areas of the country — including Washington, D.C..
Clever's Home Buyer Rebate Program is an additional cost-saving opportunity for home buyers that can help you save on both realtor fees and closing costs.
Clever buyers who spend $150,000 or more get a $1,000 rebate to help with closing costs. Fill out the online form to learn more and connect with the top-rated Clever Partner Agent in your area for a no-obligation consultation today.
Learn More: How to Get a Home Buyer Rebate