DC Home Prices Are Falling: But Not for the Reason You Think
Executive Summary
As of February 28th, 2025, DC City’s housing market has declined 10.9% year-to-date, pushing price-per-square-foot to values not seem since March 2020. Over the same five-year period, prices rose 38.3% across the broader DC Metro area and increased 43.5% nationally.
What explains this divergence? Are recent DOGE-related federal workforce cuts to blame?
The data indicates DC City’s downturn started well before any recent federal workforce reductions. The primary driver is DC City’s high exposure to condos, which represent ~50% of the total housing inventory. This heavy condo concentration amplifies market vulnerability to condo-specific shifts:
- Between 2020 and 2025, condo sales peaked in 2023 and have since fallen ~50%.
- Condo inventory surged 20–30% year-over-year by mid-2024, even as demand weakened.
- Condo prices now sit 5–10% below their early-2020 baseline.
In contrast, single-family homes and townhouses appreciated 30–35% during the same period. The data clearly shows DC City’s weakness stems from its troubled condo segment.
This analysis examines the root causes of DC's condo-driven downturn. While current evidence shows no direct link between DOGE policies and market weakness, future impacts remain possible. To provide transparency amid uncertainty, Parcl Labs now offers a free, real-time dashboard tracking key housing metrics—including prices, inventory levels, and price reductions—across DC City and the Metro area. You can also directly access this data directly via our API to build upon our work or perform your own analyses.
We will continue monitoring the situation closely and delivering timely, data-driven insights as market conditions evolve.
DC City Underperforms U.S. and DC Metro Market
From February 2020 to February 2025, DC City home prices declined 2.8%. In contrast, national home prices rose 43.5%, creating a 46.3-percentage-point gap. DC City's divergence from national trends began around Spring 2021, clearly preceding recent DOGE-related federal workforce cuts.
Over the same five-year period, prices in the broader DC Metro area increased 36.8%, representing a 39.6-percentage-point gap relative to DC City. This difference demonstrates that DC City's housing challenges are specific to the city, not indicative of broader regional conditions.
Condo Concentration Shapes DC Housing Dynamics
DC City's underperformance directly ties back to its housing composition. As of January 2025, condos make up over half of the city’s housing stock. By comparison, single-family homes and townhouses combined represent just one-third of the total inventory.
Because of this high concentration, shifts in condo-specific supply or demand dramatically affect overall housing metrics in DC City. Unlike markets dominated by single-family or townhouse segments, DC City's housing health depends overwhelmingly on condo performance.
Condo Sales Have Fallen
DC City’s high condo exposure has become problematic due to a sustained drop in demand. Monthly condo sales declined from nearly 500 units per month in 2023 to approximately 200–300 units per month by early 2025.
In contrast, monthly sales for non-condo properties—including single-family homes and townhouses—remained relatively stable throughout the same period.
Note: Parcl Labs applies a data-driven definition to identify “true sales” (arm’s length transactions) and classify condos. This methodology shapes the sales counts presented above; regardless of segmentation, condo transactions have declined, while other segments remain comparatively robust.
Condo Supply-Demand Gap Reveals DC’s Market Imbalance
Weak demand alone doesn't fully explain DC City’s condo downturn—rapidly rising condo inventory has also destabilized the market. To quantify this imbalance, Parcl Labs developed the Supply-Demand Gap, measuring the difference between year-over-year changes in inventory and sales. We previously used this metric to accurately identify Florida's market risk months ahead of others.
From November 2023 through November 2024, condo sales consistently fell 10–20% YoY, while condo inventory increased sharply—up 15–20% YoY from May 2024 onward (Figure 5). This simultaneous drop in demand and spike in supply created an oversupply of condos.
In contrast, the broader DC Metro area maintained balanced conditions in the single-family home segment, the largest property type in the region, with supply and demand rarely diverging by more than 10% YoY (Figure 6).
Condo Price Weakness Drags Down DC City’s Housing Market
DC City’s supply-demand imbalance directly translates into price pressure on condos. Since early 2020, single-family homes and townhouses appreciated consistently, with single-family homes peaking at 35% appreciation and townhouses at approximately 30% by late 2024. Although these gains moderated slightly in early 2025, both segments remain significantly above their 2020 baseline.
In contrast, condo prices struggled throughout this period. After fluctuating near zero appreciation from 2021 through early 2024, condo values began declining significantly in mid-2024, ending January 2025 approximately 7% below their early 2020 baseline. This drop in condo values aligns closely with the period of heightened oversupply and weak sales.
Given that condos make up more than half of DC City's housing inventory, their price decline directly explains the city's underperformance relative to the broader DC Metro area and the U.S. housing market.
DC Housing Outlook: Tracking Potential DOGE Impacts
Our analysis confirms DC City's housing weakness stems from condo market imbalances, not recent DOGE-related federal workforce cuts. However, future impacts remain possible as DOGE policies could affect DC's government-dependent economy.
Parcl Labs monitors three key real-time indicators to detect emerging market shifts:
- New listing volumes – Sudden increases would signal seller urgency
- Price reduction frequency – Rising price cuts reflect changing market dynamics
- Price trajectory – Deviations from DC's typical spring price growth could indicate DOGE-related pressure
As the only provider of daily-updated home price data for DC, Parcl Labs delivers exclusive access to these metrics through our free public dashboard — available here.
Follow along with Parcl Labs for continuous, data-driven updates on DC's evolving housing landscape.
