Question: How was the market for single-family homes in Arlington during the first half of the year?
Answer: All it took was 7% interest rates to stabilize prices…which is exactly what the Fed’s goal was and the Arlington single-family home market is a great example of it working. Coming into the year, there were signs that prices would fall in 2023 if rates remained high, but due to a historic supply squeeze, prices remained stable despite a significant drop in demand (the drop is supply was more significant than the drop in demand).
The data below is based on sales of single-family homes in Arlington during the first six months of the past five years.
Competition Eases, Prices Stabilize
The Arlington single-family market will always be competitive, but the intensity of the last two years has softened and brought some stability to prices:
- The average home price increased by 2.3% to over $1,360,000 and the median price increased by 1.7% to $1,220,000. If you remove new construction sales from the data, the average sale price actual decreased by .6% to just over $1,241,000.
- Over the past five years, the average home price in Arlington has increased by nearly 27%
- On average, homes are selling for just over their original asking price in 2023
- 14% of homes sold in the first half of 2023 sold for $2M+ and only 32% sold for $1M or less
- If you remove 2020 sales numbers (COVID lockdown), there were 26% fewer sales in the first half of 2023 than the 5yr average. That is almost exclusively due to low supply, not low demand.
- 68% of sales in 2023 were at or above the asking price, less than 2021 and 2022 but just above 2019 and 2020
- 64% of homes sold within 10 days on the market, last year it was 74%
- Homes that went under contract within one week on market sold for an average of 3.9% over the asking price, in 2022 the average was 6.8% and in 2019 it was 2%
Zip Code Prices All Over the Place
There was no consistency in average price change across Arlington zip codes:
- Note: 22213 only has 8 sales in 2023 so the data isn’t very reliable, I considered not including it
- 22201 led the way with an 8.9% year-over-year increase
- After massive growth in 2021 and 2022, the 22205 zip code had the worst performance, down 8.5% from last year. However, this is not a reflection of actual home values dropping in 22205 by that much, but mostly the make-up of the data set
- 22204, the zip code I now call home, remains the only zip code for a third year in a row with an average home price below $1M
- 22207, the best bellwether for Arlington single-family market conditions, continued its steady appreciation clocking in at 4.2% over 2022 to an average of $1,609,000. Without new construction sales, the average price increased by 1.8% to $1,455,000.
There is no relief in sight for interest rates, with many rates returning to the 7%+ mark as of last week. Expect a noticeably less competitive, more balanced real estate market in the second half of the year. Buyers will have a better chance at finding value and sellers should level expectations.
The big question is when will rates come down (many expect to see 4-5% in the next 12-18 months) and what will that do to prices. If inventory remains low, which it’s likely to do for years to come, I think that we’ll see another surge in demand and prices when rates break through 5.5-6%. If that coincides with Q1/Q2 of 2024, expect that surge to be amplified. Until then, I expect prices to remain relatively flat with competition light to moderate, depending on the season.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
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Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.