Question: How did the Arlington real estate market perform in 2018 and what do you expect in 2019?
Answer: Last week I discussed how the detached single-family home market fared in 2018 and this week we’ll take a look at the 2018 performance of Arlington’s condo market. Next week we’ll review the townhouse market and finish up with a detailed look into the sales data following Amazon’s HQ2 announcement.
In Like A Lion, Out Like A Lamb
2018 was a tale of two markets for Arlington condos. In July, I wrote about how well the condo market was doing for the first time in years, boasting ~10% growth from 2017. However, the net sold price in the second half of the year dropped by ~8.5% resulting in cumulative appreciation of a respectable 3.7% for the entire year. Most of the growth can be attributed to two-bedroom condos (6%), with very little growth in the one-bedroom market (1%) and losses in three-bedroom market (-2.5%). While this may not seem like much, Arlington had zero growth in the overall condo market since 2014.
Expect prices to continue to rise in 2019 as inventory continues to drop. Q4 2018 was the 11th straight quarter of year-over-year decline in condo inventory and by far the largest drop thanks to Amazon.
The total number of sales increased slightly in 2018 to 1,276 and the total cost of all of the condo sales topped $555M. The least expensive unit sold in 2018 was a 1BR/1BA 610 sqft condo in Southwest Arlington (LINK) for $115,000…that’s a great deal! The most expensive unit sold in 2018 was a 3BR/3.5BA 3,045 sqft condo at Turnberry Tower in Rosslyn (LINK) for $3,050,000. If you missed out on the Turnberry sale, not to worry, there’s a 3BR/4.5BA with nearly 4,500 sqft on the top floor currently available for $5.2M (LINK).
2018 Arlington Condo Market Highlights
Median net sold price increased 5% to $380,000
The average studio (no legal bedroom) sold for $230,000, the average one-bedroom sold for $340,000, the average two-bedroom sold for $504,000, and the average three-bedroom sold for $810,000
2018 was the 5th year in a row that buyers lost leverage in negotiations, with buyers able to negotiate an average of just 2.3% off the original asking price in 2018 compared to 2.8% last year. 29% of buyers paid at or above the asking price.
The average condo sold for a net $442/sqft. The most expensive zip codes by square foot are 22209 ($557/sqft) and 22201 ($528/sqft) which represents the Rosslyn-Ballston Corridor. The least expensive zip code by a wide margin is 22204 at just $276/sqft. 22204 encompasses Columbia Pike and the bordering neighborhoods (hint hint…investors).
The pace of the market continued to increase with average days to contract dropping 12%, proceeding a 16% drop in 2017
The average condo sold was built in 1981
The average one-bedroom was 772 sqft, the average two-bedroom was 1,126 sqft, and the average three-bedroom was 1,751 sqft
What To Expect In 2019
Pricing Breakthrough: Despite the slowdown in the second half of 2018, I wouldn’t be surprised to see Arlington-wide appreciation of at least 5% in 2019. Key market indicators like increasing pace of sales, declining buyer negotiation leverage, and decreasing supply have consistently trended in favors of sellers over the last 2-3 years, but with limited price growth. I think 2019 is the year that prices react accordingly.
Investor Activity: The Amazon announcement brought a wave of local, out-of-state, and international investors into the market. I expect there to be significant appreciation in 2019 in zip codes with the lowest $/sqft like 22204, 22207, and 22206.
Historically Low Inventory: Over the last five years, the lowest average inventory in a month was 169 condos and cooperatives (coops). On the heels of Amazon’s announcement, December averaged 100 condos and coops for sale and as of Jan 14 2018 there were 101 for sale. If you remove coops and age-restricted housing from the mix, that number drops to 61 units for sale. Will owners take advantage of the low inventory and go to market with higher prices or will they wait for the Amazon-effect to take shape before selling?
New Construction: Two new construction buildings, Trafalgar Flats and Pierce Court, will finish sales and deliver in 2019 and three new construction buildings will open sales in 2019, 2000 Clarendon, an unnamed project in Ballston at 11th and Vermont, and a project similar to Pierce Court and just around the corner.
Time To Update: Many of the condos along the Rosslyn-Ballston Corridor are 10-15 years old and selling with their original finishes (same floors, appliances, countertops, and bathrooms) which are losing their appeal to today’s buyers. The return on investment owners can get from making strategic updates to finishes is increasing and a great way to standout from competition, albeit limited competition.
Up next week….a similar look at the Arlington townhouse 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.