Question: The market seems even more intense this year than last, is that accurate?
Answer: I didn’t think the market had much more room to absorb higher prices and intense competition again this year, but that has proven to be wildly untrue. From single-family homes to condos, the first ten weeks of 2022 have given us even more competition and price escalation than last year, all while interest rates have spiked.
High Escalations, Fast-Paced Sales Across All Property Types
I compared sales of Arlington properties that were listed and under contract in the first ten weeks from the last five years to measure how the start of 2022 has compared to previous years.
Detached/townhouse properties are selling for an average of 4.9% over the asking price with 85% selling within seven days on the market and 92% going for at or above the asking price. These numbers dwarf what had been historically competitive first-quarter markets in the previous four years.
The condo market, which suffered through much of the pandemic, is officially back with competition and escalations picking back up to levels close to what we saw during the post-Amazon HQ2/pre-pandemic market. We’re still seeing an above-average volume of condos being listed for sale (based on 5-year averages), which is keeping the condo market somewhat in check, but I expect the intensity of this market to increase through the spring and deep into the year.
What About Higher Interest Rates?
Thus far, the market has mostly shrugged off intense headwinds created by rapidly increasing interest rates (see chart below), plummeting stock prices, and the war in Ukraine. Just yesterday rates jumped another .125-.25%.
There must be an inflection point somewhere, but so far hyper-low inventory, rising incomes, and high demand have kept us from it.
Arlington In Three Charts
Three charts clearly illustrate why competition is so fierce across all property types in Arlington right now:
-
Months of Supply (MoS): A measure of supply and demand calculated by how long existing supply can last based on current demand (lower = seller’s market). The detached market reached all-time lows in November 2021 and has decreased each month since, falling to just 1.5 weeks of supply in February. The condo market hovered around two weeks of supply post-Amazon HQ2 and spiked during the summer of 2020 to around three months of supply. Since December, supply dropped to roughly one month and is poised to drop below the one-month mark this spring.
-
Active Listings: The number of active detached and condo listings is down 40% year-over-year in each of the last two months. Reminder that last year I was also writing about historically low detached/townhouse inventory.
-
New Listings: The volume of new detached and condo listings has been down year-over-year each month since July 2021. This pattern will have to quickly reverse this spring if we want any sort of balance in the 2022 market.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.
