Washington Stopped Building the First Rung
The story Washington tells about its high end real estate market is a story about strength. Records keep printing. The best houses still trade, the numbers hold. Underneath that story sits Arlington County, where the county's own study estimated its Expanded Housing Options ordinance would add somewhere between 94 and 108 middle housing units over ten years, and where the Virginia Supreme Court agreed in May 2026 to take up a fight already three years old, with nobody serious expecting that decision to end it.
Roughly a hundred houses over a decade? Anyone else see the problem here?
The starter home in this region didn't disappear because a generation stopped wanting one. We made it hard to build, expensive to leave, and easy to sue over. The part that often gets missed is that the top of this market isn't isolated from feeling these effects.
Across the greater DC metro, 23,614 housing units were added in 2025 against a target of 25,013. Building permits have fallen every single year since peaking at 25,899 units in 2021, landing at 13,589 last year. Inside the District it's even more telling. Only 1,372 multifamily units were permitted in 2025, down from an annual range of 5,000 to 8,000 not long ago. In January of 2026, exactly one multifamily building pulled a permit. Thirty units.
A permit is a promise ~three years out. If we read DC's permit count that way, the story about 2029 is already written. The problem is, nobody in this region has bothered to read it aloud.
Now let's look at who can actually transact. Federal Housing Finance Agency (FHFA) researchers have put a number on the problem: Every percentage point between a homeowner's locked-in rate and today's market rate cuts the odds they sell by 18.1%. Hold that in relation to the fact that roughly 80% of outstanding mortgages still carry a rate under 6%. A family with a 3% rate and a third child on the way has quietly become a long-term tenant of an asset they happen to own.
The result shows up in who's left at the closing table. First-time buyers made up 21% of all home buyers in NAR's most recent survey, down from 24% and the lowest share since the data began in 1981. The typical first-time buyer is now 40 years old, an all-time high. Baby boomers are the largest generational block of buyers at 42%, against 26% for millennials, and boomers account for 55% of sellers as well.
In Washington, as in most of the country, the primary qualification to buy a house is now already owning one.
Part one of two. Continued in Money From Somewhere Else.
Marc Cashin is the Founder and CEO of FORWARD at Corcoran McEnearney, representing buyers and sellers in Washington DC, Maryland, and Northern Virginia. This article was first published on LinkedIn.
