April 2025: First Signs of Regional Distress Surface in REVIVE Index

The Greater Washington REVIVE Index dropped 4.8% from the previous month, the most significant drop since 2022 when the effect of higher interest rates began taking a toll on the region. An unfavorable shift in real estate investment trends mainly pushed the index lower, but challenged stock markets and lower federal government contracts also contributed. The decline brought the index level to 70.9, erasing recent gains and momentum achieved during the last quarter of 2024.

The main source of this month’s decline in the REVIVE index was a pullback in commercial and multifamily real estate investment indicators. The commercial real estate composite dropped 17% over the last month as sales activity and values declined. Multifamily investment trends experienced a similar withdrawal in conditions, driving the residential real estate composite 4% lower than last month. Real estate investors may be exercising more caution based upon the recent surge of federal government initiatives, but there is also a natural volatility and seasonal effect in these datapoints that may have influenced the most recent performance.

Some of the lackluster real estate investment performance was also evident in the Investor Sentiment composite of the REVIVE index, where the abundance and diversity of real estate investors are tracked. This composite dropped 14.4% over the last month, the largest decline since March 2020 when the COVID-19 pandemic began. However, most of the decline in this composite derived from lower stock prices of local Fortune 500 companies, which have been caught up in a broader sell-off in stock markets.

Federal government contracts and grants in Greater Washington declined in February, but not significantly or reflective of a downward trend. However, contracts and grants fromresearch and innovation offices of certain agencies dropped for a fourth consecutive month, weighing down the Innovation composite of the REVIVE index.

On a positive note, the Mobility and Visitation composite picked up in February after declining the previous three months. The region’s home prices rose for the 24th consecutive month, reaching yet another record high.

We will continue to monitor Greater Washington’s vibrancy closely as 2025 develops.