Question: How has the Arlington condo market performed in the first half of 2024?
Answer: The Arlington condo market had a historically strong first half performance this year, with average prices up a whopping 13.6% in the first half of 2024 compared to the first half of 2023.
A Wave of Demand Led to Remarkable Appreciation
Coming into the year, there were strong signs of upward price pressure in the condo market with inventory levels well below the 10-year average and significant increases in key demand metrics (% of condos selling within ten days and % of sale price to original asking price). We also had pent-up demand from would-be condo buyers in 2023, who held off on a purchase waiting/hoping for rates to drop, combined with the normal cycle of 2024 condo buyers to create strong demand in the first half of the year.
For a market that is generally flat/stable, even appreciation of 3-5% in a year is notable on a historical level, making double-digit growth is remarkable. For perspective, by most measures, we saw more appreciation in the first half of this year than we saw in the 12-16 months following the Amazon HQ2 announcement.
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.
Highlights of a Strong Condo Market
There was strong growth in nearly every sub-market, but it seems that the most significant growth was driven by two-bedroom condos, likely the result of would-be townhouse/single-family buyers being priced out of those markets and scaling back into a two-bedroom and empty-nesters downsizing from larger single-family homes. I’ve collected some of the highlights below:
- The average price of a condo increased by 13.6% to $568,000 and the median price increased by 9.6% to $470,000
- I find price-per-square-foot to be a more accurate measure of price appreciation for condos, which shows an overall increase of 10.4% compared to 2023, with 6% growth for one-bedroom condos and an incredible 14.1% growth for two-bedroom condos
- The 22209 zip code (Rosslyn area) boasted the strongest geographic growth due to it having a much higher ratio of two-bedroom condos relative to one-bedrooms units compared to the rest of the Arlington market
- Removing new construction data has little effect on the pricing data from 2023 to 2024
An Odd and Interesting Piece of Data
I often look at demand metrics to explain and forecast market conditions. My preferred metrics are the percentage of homes sold within ten days on market and the percentage sold at or above the original asking price. A sharp increase/decrease in these two demand metrics (charted below), plus the average sold to original asking price (in the first table above) almost always coincide with a sharp increase/decrease in price appreciation – a hot market where more homes are selling faster and for more relative to asking price correlates to high price growth.
What I find odd and interesting is that we see relatively no change in these metrics between the first halves of ’22, ’23, and ’24 yet ended up with remarkably high appreciation in 2024. What this suggests is that in many cases, the asking prices were well-aligned to the increased market value.
What I experienced in my own business was a lot of condos escalating in price early in the year and then seeing asking prices quickly adjust to the price trends. That certainly doesn’t apply to all, or even most, sales but it seems that pattern played out in enough transactions to keep those key demand measurements at bay.
Looking Forward
So much of market values and price growth is driven by supply levels and, as you can see from the chart below showing active inventory (supply) in the Arlington condo market, we are trending well below the 10-year average and continuing a downward supply trend year after year since 2020.
I expect prices to mostly hold in the second half of the year and likely increase again in the first half of 2025, especially if interest rates begin to fall. There are a lot of would-be condo buyers waiting out interest rates in rental apartments so I expect to see a surge in demand if there’s a quick drop in rates of 1-2%.
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.
