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D.C. Housing Market Now 'Affordable', Says Economist

  //house-home.news-articles.net/content/2026/02/1 .. ousing-market-now-affordable-says-economist.html
  Published in House and Home on Wednesday, February 18th 2026 at 5:46 GMT by WTOP News
      Locales: District of Columbia, UNITED STATES

WASHINGTON - February 18th, 2026 - After a period of relentless price growth that squeezed many potential buyers out of the market, the Washington D.C. metropolitan area housing market is experiencing a significant shift. Zillow's chief economist, Mark Zandi, declared on WTOP's "The Business" program yesterday that the market can now be characterized as 'affordable' - a surprising assessment given the recent history of soaring home values.

This declaration signals a noteworthy change in conditions. For years, the D.C. area has been one of the nation's hottest housing markets, driven by a robust job market, high incomes, and limited housing supply. Competition for properties was fierce, bidding wars were commonplace, and prices climbed rapidly, making homeownership increasingly out of reach for many.

Zandi attributes this newfound affordability primarily to the actions of the Federal Reserve and rising interest rates. "Interest rates did the work, the Fed did the work, to cool down the market," he stated. The Fed's aggressive monetary policy, designed to combat inflation, effectively dampened demand by increasing the cost of mortgages. This cooling effect has slowed the pace of price increases dramatically, and in certain pockets of the D.C. area, prices have even registered slight declines.

However, it's crucial to understand that 'affordable' is a relative term. While the market is demonstrably more accessible than it was at its peak, prices remain elevated compared to pre-pandemic levels. This means that while the pressure on buyers has eased, homes are still expensive, and significant financial commitment is required to enter the market. The correction isn't erasing the gains of the past few years; it's simply moderating the rate of growth.

Looking Ahead: Stabilization, Dip, and Recovery

Zandi predicts a period of continued stabilization in the near term. He doesn't foresee a dramatic market crash, but rather a gentle descent followed by a recovery. "We've been through this before, and it's not a crash," he emphasized. "We'll see prices come down a bit, but they're not going to crash." This cautious optimism is based on the expectation that the Fed will eventually begin to ease monetary policy as inflation comes under control, potentially lowering interest rates and stimulating demand.

This predicted stabilization phase presents both opportunities and challenges. For potential homebuyers, it provides a window to enter the market with less competition and potentially negotiate better deals. However, they must also factor in the continued high cost of borrowing and the possibility that prices could remain stagnant for a period. Sellers, on the other hand, may need to adjust their expectations and accept lower offers than they would have commanded a year or two ago.

The long-term outlook for the D.C. housing market remains positive. The region's strong economic fundamentals - particularly the presence of numerous government agencies, defense contractors, and technology companies - continue to attract a skilled workforce and drive demand for housing. However, addressing the chronic housing shortage will be crucial to ensuring long-term affordability and sustainable growth. Increased density, streamlined permitting processes, and innovative housing solutions will be essential to increase the supply of housing and meet the needs of a growing population.

National Trends Echo D.C.'s Shift

The D.C. area's experience mirrors a broader national trend of softening home prices. Across the country, housing affordability has become a major concern, and many markets are undergoing similar corrections. While regional variations exist, the overall trajectory points towards a more balanced market in 2026, offering some respite to prospective buyers after years of unrelenting price increases. Whether this relative affordability holds will depend on a complex interplay of economic factors, including inflation, interest rates, and job growth. The next 12-18 months will be critical in determining the long-term health and stability of the D.C. housing market, and indeed, housing markets nationwide.