Question: How did the Arlington real estate market perform in 2018 and what do you expect in 2019?
Answer: Happy 2019! Before 2018 is too far in our rearview, I’d like to update you on how the market performed in 2018 and what you can expect going forward in 2019. This week will focus on detached single-family homes, next week we’ll take a look at the condo market, then the townhouse market, and conclude with a deep analysis of sales activity following the Amazon HQ2 announcement. If you’re here for fancy graphics, I’m sorry to disappoint…good data will have to do!
Happy Owners, Frustrated Buyers…Again
2018 continued the strong appreciation in the detached single-family housing market we saw in 2017, with 4.6% appreciation following last year’s 4.5% growth. Growth in 22203 (15.4%) and 22201 (11%) led the way. Unlike 2017, which added inventory year-over-year (YoY), we’re in the 5th straight quarter of YoY inventory loss with an average YoY quarterly decline of roughly 20% in 2018…brutal. There was a drop is total sales this year from 2017’s high of 1,153 to a 5-year low of 1,041. The drop, in my opinion, has nothing to do with lack of demand, rather frustrated buyers not finding what they want and/or what they want getting too expensive (I’ve got a few clients nodding along).
The prices below represent net sold price calculated by subtracting any seller-paid closing cost credits against the sold price. 22206 and 22213 have relatively few sales, so averages aren’t reliable and I removed 22209 (two detached sales).
Real Estate Highlights from 2018
Median net sold price increased 3.5% to $890,000 after last year’s 5% growth
Buyers had a harder time negotiating in 2018, paying .4% more relative to the original asking price than last year. 40.7% of homes sold for at or above the original asking price.
Median days on market remained almost unchanged from previous years, sitting at 49 days in 2018. 36% of homes sold within their first week on the market.
New construction sales dropped for the first time in years from 129 in 2017 to 87 in 2018. It’s the first time new home sales have been below 100 since 2013. I’ve been saying for a couple of years now that I think buyers are tiring of the same designs in new construction and builders who deliver some variation will reap the benefits. Note: the MLS captures a majority of new home sales, but not all of them.
The average detached home sold in 2018 was built in 1959, which is in-line with historical trends. It’s likely that this stat will remain about the same until more of Arlington’s Baby Boomers decide to downsize/relocate and free up more 1970s-1990s housing.
On average, a home in Arlington has 4BR/3.5BA over 3,000 sqft on .20 acres of land
What to Expect in 2019
Building Price Momentum: A majority of the YoY price growth in 2018 occurred in Q3 (13.3% YoY) and Q4 (8.6% YoY). Hold on tight, as of 12PM on Jan 7 29 homes had already gone under contract this month.
Historically Low Housing Inventory: Over the last five years, Arlington has averaged 145 detached homes for sale in January and never had a month that averages below 100 homes for sale in 10+ years. There are currently 84 detached homes for sale in Arlington and only 13 of them are under $1M, but don’t worry friends, 22 of them are over $2M!
Leveling Interest Rates: Many buyers hesitated in 2018 due to rapidly increasing rates and it held pricing back. Buyers will start to adjust to these rates in 2019 and the Fed is expected to increase their rate twice this year, after doing so four times in 2018. A more stable interest rate will likely give buyers more confidence to purchase.
Amazon: A big question is how both buyers and sellers will react to Amazon HQ2 coming to Arlington. Based on what I’m seeing in the market and what I’m hearing from clients and colleagues, buyers will be more comfortable increasing their budget or paying above past sales with the security of (probable) future mid-long term growth. On the other hand, quite a few would-be sellers are finding ways to hold onto properties for a bit longer which will exacerbate our housing inventory problems.
Up next week….a similar look at the Arlington condo market!
If you are buying or selling a home in or around Arlington in 2019 and would like to talk further about your strategy, you can send me an email at Eli@EliResidential.com to schedule a meeting.