Answer: Sometimes the market surprises you (read: me) and the first half of 2024 was one of those times. After a relatively tame 2023 and prolonged high interest rates, I expected to see fairly stable pricing until rates dropped. By the second week of January, it was clear that buyers had other ideas, and I saw most homes in Northern VA selling for 5-10% more than they had in 2023 with intense competition.
How the Data is Organized
For my mid-year reviews, I like to compare the first half of the year to the same period (first half) of prior years, rather than comparing the first half of the current year to the full year in prior years. We tend to see a much stronger market (higher demand, more competition) in the first half of the year than the second half, so I feel like this approach gives us a more apples-to-apples comparison.
It’s also important to note that the data I use is based on homes that went under contract in the first half of the year because it’s more reflective of actual buying activity during that period; as opposed to looking at homes that closed in the first half of the year, but may have gone under contract many months prior during different market conditions.
Strong Price Growth and Competition
Across all property types, average home prices in Arlington increased by 6.8% in the first half of 2024 compared to the first half of 2023.
Let’s look at the performance of Arlington’s single-family home (SFH) market in the first half of 2024 compared to the previous four years:
- The average and median price of a SFH increased by 4.8% and 4.0% year-over-year, respectively
- Over the past five years, the average and median price of a SFH in the first half of the year increased by 24.9% and 31.4%, respectively
- The average SFH sold for more than $1.43M and if you remove new construction homes from the data, the average SFH sold for more than $1.32M
- The median home price is $1.3M
- Demand and competition in the first half of 2024 was on par with the first half of 2021, but still fell well short of the intensity of 2022 (note: the first half of 2022 was slowed at the end by rapidly rising interest rates in late spring/early summer)
- For the past five years, the first half of the year has experienced anywhere from 65-82% of all homes going under contract in ten days or less
- In 2024, two-thirds of homes that sold went under contract in ten days or less and buyers of those homes paid an average of 3.1% over the asking price
- Just 27% of SFH sold in 2024 were less than $1M
Looking Forward
What we are seeing right now is price growth that is driven by persistent low supply. Prices and competition are high despite moderate demand (interest rates), as opposed to the demand-driven growth of late 2020 through early 2022. Last month, I wrote that we’re starting to see some early signs of a weakening market, but I don’t expect to see any significant pull-back on pricing in the second half, especially in Arlington.
Most likely, the only scenario where supply comes back to pre-pandemic levels is interest rates dropping to ~5% or less and causing homeowners with rate-lock (owners who want to move, but can’t justify giving up 2.5-3.5% interest rates) to finally decide to move. However, the downside of that scenario is that even though supply will jump, so will demand and that will continue pushing prices higher. There really does not seem to be relief coming for buyers any time soon.
Keep in mind, this is not true for many other markets outside the DC Metro/Northern VA. Other markets nationally are and will see prices pull-back as inventory mounts. I think this will be especially true in markets that are heavy on second homes.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.
