Question: How did Arlington’s condo market perform in 2024?
Answer: The condo market is usually pretty stable, without much appreciation, but as we closed out 2023, I was observing signs of upward price pressure in the condo market which turned into uncharacteristically strong price appreciation for Arlington condos in 2024. By the time I ran my mid-year condo market review in July, prices were up double-digits in many sub-markets. As is usually the case, things cooled off a bit in the second half of the year, but the strong gains mostly held with the average price of an Arlington condo 9.7% higher in 2024 than in 2023. Let’s dig into the 2024 condo market performance…
The data below looks at Arlington’s condo market, specifically multi-family condos, last year and the trends over the past five years. Most real estate data sets look at numbers based on the year a home sold/settled, but I prefer to look at data based on when a home went under contract because it gives a more accurate reflection of what was happening in the marketplace at the time the deal was agreed to. In past analysis, I have used “net” prices (sold price less seller closing cost credits), but due to MLS data changes, this data does not net out closing cost credits.
Condo Market Up Big, Two-Bedrooms Lead
A ton of condo inventory was unleashed into the market from 2020-2022 during the COVID years and it took a while for it to be absorbed, but by the end of 2023, inventory levels had dropped well below the ten-year average, setting up a strong year in 2024.
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The average price of a condo increased by 9.7% to $548,625, the average $/sqft increased by 6.1%, and the median price increased by 7% to $460,000
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Over the past five years, the average condo price is up 13.2%, and just 7.6% on a $/sqft basis
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The value of two-bedroom condos has increased significantly more over the past five years (16.8%) and in 2024 (9.6%) than one-bedroom condos (2.9% and 3.2%, respectively)
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The number of contracts in 2024 was 28% lower than the average annual contracts from 2020-2022, a result of low listing supply, not low demand
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47% of condos sold within the first ten days on market and those buyers paid an average of 1.2% over the original asking price. Overall, the average condo sold for 1.2% under the original asking price, highlighting the difference in negotiation leverage buyers have after two weeks on market.
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Owning in a building built in the last 25 years comes at an average premium of 31%, averaging $717,567
Rosslyn-Area Condos 2-3x More Expensive
The Rosslyn area (22209) commands Arlington’s luxury condo market (yet still doesn’t have a legitimate grocery store!) and thus has bragging rights for the highest average price, nearly twice the average cost of a condo in the next most expensive zip code, 22202 (Pentagon City/Crystal City aka National Landing), and 3x more than South Arlington’s 22204.
More Cash Buyers Than Ever
The percentage of cash buyers in the condo market has doubled to 30% since 2020/2021. See that big jump from 2021 to 2022? That’s the market solving the high interest rate problem by investing cash into the market rather than taking on expensive debt.
92% of Condos Sold Have One or Two Bedrooms
The Arlington condo market is dominated by one- and two-bedroom condos, which make up over 92% of sales in the last five years.
Average Condo Fee Over $700/month
Before you say no to condo fees, read my 2023 article on why condo fees are so underappreciated. While you may want to scream at your Treasurer or Management Co that the average condo fee is up more than 27% over the past five years, keep in mind that home maintenance and improvement costs (materials + labor) are up about that much for owners across all property types and condo fees are just a reflection of the materials and labor costs it takes to maintain your building/Association.
Looking Ahead – Upward Price Pressure, Less Demand
Last year, I noted the downward trend in inventory, improving interest rates, and forecasted pent-up buyer demand as a combination of factors that could drive prices up in 2024. This year, we see a continuation of the lower inventory trend, but interest rates have trended up over the last 3-4 months, and I don’t expect there to be as much pent-up demand this year as last. I foresee low inventory continuing to put upwards pressure on prices, but high rates and more moderate demand limiting the appreciation upside to maybe a few percentage points – still a very good year for condos relative to historical averages.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
