THE WEEK IN REVIEW

Welcome to my weekly newsletter featuring a personal note on the ever-evolving world of real estate along with a few news-worthy updates. Enjoy!

DOWNSIDE STICKY

Have you ever wondered why home prices don't seem to drop even when the market slows down? It's a phenomenon called "downside stickiness," and it's happening right now in the housing market.

The "Downside Sticky" Effect: Many potential sellers, especially those who bought in the last three years, are unwilling to sell at a loss. When Sellers factors in the costs to transact, their calculations lead them to list the home at a price above what the market will bear. When a listing doesn't sell, the Seller decides to withdraw it from the market. This creates a real cap on inventory growth.

National inventory hasn't increased in two months, holding steady around 863,000 single-family homes. This is in stark contrast to last year, when inventory was rising quickly.

Fewer Sellers in the Pipeline: The pace of new listings is shrinking. This week there are just over 66,000 newly listed homes, which is 5% fewer than the same week a year ago. This trend, coupled with elevated withdrawal rates, makes it hard for inventory to grow. Supply and demand, as always, are the ultimate arbiter of price.

Slightly More Sales: In addition to the seller cap, home sales are inching up. That means inventory is getting absorbed more quickly. Stats nationally showed 77,000 total sales contracts started this past week (64,000 single family, 13,000 condo), an almost 5% improvement over last year. Condo sales, in particular, are up 9%.

While some buyers are waiting for both lower interest rates and lower prices, the "downside sticky" phenomenon suggests we're unlikely to get both.

real estate & the news

• At least one-fifth of individuals among the world’s 500 biggest fortunes now have a family office that help to oversee wealth totaling more than $4 trillion.  (BLOOMBERG)

• How prepared is your state to respond to a natural disaster? As the role of FEMA is diminished on the Federal level shifting the responsibility of responding to natural disasters to the states, home owners need to evaluate how well equipped their state is to deal with this type of response. (WSJ)

• Developers that want to speed up their proposals to build housing in London must generally allocate 35% of a development to affordable housing as part of an agreement with their local authority. The GLA has been discussing lowering that threshold to quicken the sclerotic pace of house building. The government wants to deliver 88,000 homes a year in London, but only 3,950 new homes were completed in the first half of 2025 as 35% makes most projects economically non viable....they wish to add 1.5 million homes! (FT)

around dc

GEORGETOWN FALL MARKET

OCTOBER 18 & 19

The Georgetown Fall Market emerged from the widely successful Georgetown French Market, hosted by the Georgetown Business Improvement District every April. If you know and love the French Market like we do, expect a similar format from this event, only with a bit of pumpkin spice. 

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Join us in Book Hill and all along Wisconsin Avenue from N Street to Reservoir Road, for small business promotions, fall-inspired menus, and autumnal activities for all to enjoy. For more details visit Georgetown's Main Street's website here.

Lee Arrowood

Principal, Arrowood Advisory at Compass

M: 202.251.3175

O: 202.448.9002

lee.arrowood@compass.com

+$173M Sold In 2023

#3 Team Lead 2022