Why 45% of DMV Homes Sell Below Asking While Prices Keep Rising in 2025

TL;DR

• 45% of DMV homes sell under asking price while prices still rose 5.4% year-over-year in 2025.

• The DMV now behaves like three separate markets: Northern Virginia (surging), DC proper (cooling), Maryland suburbs (mixed).

• Federal workers represent only 9% of the DMV workforce, so layoff fears are overstated.

• Inventory jumped 40% by mid-2025, shifting negotiating power back to buyers.

• Sellers keep pricing based on pandemic-era peaks, while buyers negotiate hard in a rebalanced market.

DMV Housing Market 2025: Prices Up While 45% Sell Below Asking

Forty-five percent of DMV homes now sell under asking price. At the same time, prices climbed 5.4% year-over-year in 2025.

This should not happen on paper.

When nearly half of transactions close below list price, you would expect downward pressure. Instead, the market pushes higher. I have tracked this data for months. The disconnect reveals what most people miss about how this region really works.

The Paradox of Rising Prices and Under-List Sales

Under-list sales usually signal weakness. Here, they signal mispricing.

Sellers still anchor to peak pandemic conditions. They list too high. Buyers, armed with more choices and better information, refuse to chase inflated numbers. They negotiate down.

The result: individual homes close below asking, but the overall price level still climbs because:

• Well-priced homes in strong micro-markets sell quickly and often at or above list.

• Weakly positioned listings simply adjust down from unrealistic starting points.

What the Data Reveals About the DMV Market in 2025

Look beneath the averages and a clear pattern shows up:

• Pricing behavior is out of sync with current demand.

• Buyers have more leverage than they did from 2020 through 2023.

• The DMV no longer behaves like one unified market.

It has split into three.

Myth vs Reality: Federal Workers and DMV Housing Demand

You have probably heard this story:

“Government layoffs will crash the market. Federal employees are fleeing DC. The flood of listings will tank prices.”

The data does not back that up.

Is the Federal Worker Exodus Real?

No. The federal worker narrative is wrong.

Federal workers represent only 9% of the DMV workforce. That is important context. Even if there were cuts, the percentage of the workforce directly impacted is much smaller than the headlines suggest.

On top of that, February 2025 listings matched February 2024 almost exactly. If there were a mass exodus of federal workers, you would expect to see a surge of new listings hitting the market. It is not there.

Why Federal Layoff Fears Will Not Crash the DMV Housing Market

Bottom line: federal employment changes affect less than one-tenth of the regional workforce.

Inventory data shows no flood of listings triggered by government workers leaving the area. The “federal crash” story is mostly noise.

The real story is fragmentation.

Three Separate DMV Housing Markets: Northern Virginia, DC, and Maryland

The DMV does not move as one unified market anymore. It operates as three distinct markets, each with its own momentum and risk profile.

How the DMV Split Into Three Distinct Real Estate Markets

Same metro area. Three different realities.

The split is driven by:

• Different job centers and commute patterns.

• Different property types and price brackets.

• Different local policies, schools, and lifestyle priorities.

Here is how each segment is behaving.

Northern Virginia Real Estate 2025: Arlington and Alexandria Surge

Market 1: Northern Virginia (Strong Growth)

Northern Virginia shows clear buyer demand, especially for family homes.

• Arlington pending sales jumped 10.6% in September 2025.

• Alexandria climbed 13.2% in the same period.

• Buyers compete aggressively for family homes under $1.5 million.

Well-priced properties here still attract multiple offers and can close at or above list. This is one of the main engines pulling regional prices higher.

DC Proper Housing Market: Cooling Demand and Struggling Condos

Market 2: DC Proper (Cooling)

Washington DC tells a different story. Activity is slowing.

• Pending contracts fell 17.9% in September 2025.

• Showings dropped 12.7%.

• Condos take 28 days to sell, compared to 8 days regionally.

Condos represent the weakest segment in the region. Longer days on market and more frequent price reductions are symptoms of a market that no longer supports aggressive list pricing.

Maryland Suburbs Housing Market: Mixed Performance by Location

Market 3: Maryland Suburbs (Mixed Performance)

Maryland is all about location-specific performance.

• Brunswick exploded 41% year-over-year.

• Falls Church City declined 13.3%.

Same greater region, wildly different outcomes. Some pockets behave like Northern Virginia. Others align more with DC’s slowdown.

What is driving this? Fragmentation explains the paradox. Sellers price with optimism based on peak pandemic conditions. Inventory surged 40% by mid-2025. Buyers now have leverage they have not had in years.

DMV Housing Inventory Up 40%: How It Shifted Power to Buyers

Inventory is the quiet force behind this entire shift.

Why DMV Inventory Surged 40% by Mid-2025

Sellers watched pandemic-era bidding wars and decided to enter the market expecting the same conditions. More listings came on. At the same time, demand normalized.

By mid-2025:

• Inventory increased 40%.

• Buyers gained options.

• The imbalance that had favored sellers for years started to correct.

This inventory surge did not crash prices. It did something more subtle: it restored negotiation.

Why So Many DMV Homes Sell Below Asking Price

If nearly half of homes sell below asking, the immediate assumption is that the market is weakening. In reality, the pricing strategy is what is weak.

Why Buyers Are Negotiating Below Asking Price Again

Negotiation has returned to the DMV market.

Buyers no longer accept list prices as a starting point. They:

• Make offers below asking.

• Ask for closing cost help.

• Push back on inspection items instead of waiving everything.

And they often win.

Well-priced homes in strong micro-markets still get multiple bids and close at or above list. Overpriced homes in weaker segments sit, adjust, and eventually sell below the original asking price.

The gap between these experiences keeps growing.

Under-List Sales as a Sign of Market Rebalancing, Not a Crash

Are under-list sales a warning sign?

No. Under-list sales do not signal a collapse. They signal a rebalancing from seller-dominated pricing back to negotiated transactions.

Prices rise while individual homes sell below asking because sellers start too high. Buyers respond with lower offers. The market adjusts through negotiation, not through a regional price drop.

The market is not broken. It is simply no longer uniform.

Are Under-List Sales a Warning Sign or a Healthy Correction?

Under-asking sales reflect:

• Seller overpricing based on outdated expectations.

• Buyer discipline after years of chasing limited inventory.

• A structural split between strong and weak sub-markets.

Regional prices can climb while many individual deals close under list because the best-located, well-priced homes still command premiums that pull the averages up.

What This Market Means for DMV Buyers and Sellers

Regional averages are now almost useless as a pricing tool.

The DMV average hides the gap between Arlington’s hot family home market and DC’s sluggish condo inventory. Location and property type matter more than the headline number.

What Today’s DMV Market Means for Home Buyers

For buyers, this is the most favorable environment in years.

• You have more inventory to choose from.

• You can negotiate on price and terms.

• You can target weaker segments (like condos in DC) for better deals.

Success for buyers now looks like:

• Focusing on specific micro-markets instead of “the DMV” as a whole.

• Looking at recent local comps, not just list prices.

• Staying disciplined on value, especially where days on market are higher.

What Today’s DMV Market Means for Home Sellers

For sellers, the game has changed.

You cannot simply pick a pandemic-era number and expect buyers to chase it. To succeed in this environment, you need to:

• Price based on your specific sub-market, not regional averages.

• Recognize whether you are in Northern Virginia, DC proper, or a mixed Maryland pocket.

• Accept that negotiation is back and build that into your strategy.

Pricing strategy must align with the market that exists, not the one you wish existed.

DMV Housing Market FAQ 2025

Why do DMV home prices rise while 45% sell below asking?

Sellers continue to list homes above true market value based on pandemic-era pricing. Buyers negotiate down from these inflated asking prices.

Regional prices still rise because:

• Well-priced homes in strong areas, especially in Northern Virginia, often sell at or above list.

• These strong sales offset under-list transactions in weaker segments when you look at the averages.

Will federal layoffs crash the DMV real estate market?

No. Federal workers represent only 9% of the DMV workforce.

February 2025 listings matched February 2024 levels. There is no evidence of a mass sell-off by government workers. Federal employment noise is loud, but its real impact on the housing market is limited.

Which DMV areas show the strongest real estate growth?

Northern Virginia leads growth.

• Arlington pending sales jumped 10.6% in September 2025.

• Alexandria climbed 13.2%.

• Family homes under $1.5 million face strong competition and frequent multiple offers.

Why is the DC condo market struggling?

DC proper shows declining activity and condo-specific weakness.

• Pending contracts fell 17.9% in September 2025.

• Showings dropped 12.7%.

• Condos take 28 days to sell compared to 8 days regionally.

Longer days on market and more frequent price reductions signal buyers are pushing back on DC condo pricing.

What caused DMV inventory to increase 40%?

Sellers came to market expecting 2020–2021 style demand. Buyer demand normalized while more listings hit the market.

The result was a 40% inventory increase by mid-2025, which:

• Gave buyers more options.

• Reduced urgency and bidding wars.

• Shifted negotiating power back toward buyers.

Should I use regional averages to price my DMV home?

No. Regional averages mask critical variation between sub-markets.

• Arlington’s family home market behaves very differently from DC’s condo market.

• Some Maryland suburbs are surging, while others lag.

Price based on your specific location, property type, and the last 3–6 months of local sales, not DMV-wide trends.

Is the three-market DMV split temporary?

The data suggests it is not.

Northern Virginia, DC proper, and the Maryland suburbs show sustained divergent trends through 2025. The split looks structural, driven by:

• Different buyer demographics.

• Different property types and price ranges.

• Local economic, policy, and lifestyle factors.

How do I succeed in the current DMV real estate market?

Success starts with knowing which of the three markets you are actually in.

For both buyers and sellers:

• Focus on micro-market data, not headlines.

• Use recent comparable sales in your specific area.

• Expect negotiation on both sides.

Buyers should use their leverage without assuming a crash. Sellers should price realistically and be prepared to negotiate.

Key Takeaways: How to Price and Negotiate in the DMV Housing Market

• 45% of DMV homes sell below asking while regional prices climb 5.4% year-over-year because sellers overprice and buyers negotiate down.

• The DMV functions as three markets: Northern Virginia (strong growth), DC proper (cooling), and Maryland suburbs (mixed performance).

• Federal workers represent only 9% of the DMV workforce, making government layoff fears disproportionate to actual market impact.

• Inventory surged 40% by mid-2025, shifting negotiating power from sellers to buyers after years of seller dominance.

• Regional averages hide critical variation between sub-markets. Location and property type predict outcomes better than DMV-wide trends.

• Under-list sales signal market rebalancing and renewed negotiation, not price collapse or market failure.

• Pricing strategy must align with your specific sub-market reality, not regional averages or wishful thinking.

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