Question: How is the condo market performing so far in 2022?
Answer: The condo market has looked very different than the single-family/townhouse market since COVID struck. While the latter has exploded, the former struggled initially but has stabilized and strengthened over the past 12 months. With the first quarter of 2022 behind us, let’s look at the data driving the Arlington and Washington DC condo markets.
Prices Mostly Flat in Arlington and DC
I generally find that median, instead of average, price changes are more reflective of what most buyers/sellers experience in the market. The median condo price in Arlington is up 8.1% year over year in Q1 2022 and 2.6% in DC. However, you can see that the overall price trend over the last two years is mostly flat in both markets and up slightly from pre-pandemic prices.
Interestingly, the average and median $/SqFt in DC has decreased slightly over the last 12 months but increased slightly in Arlington over the same period. My best guess is that it’s a reflection of less demand for smaller downtown condos (smaller homes tend to have higher $/SqFt).
Both Arlington and DC had noticeable increases in average sold prices year over year in Q1 2022, jumping 10.3% and 8.2%, respectively, with similar increases in Q4 2021. My best guess on this trend is that it’s a reflection of some buyers giving up on the single-family/townhouse market and turning to larger, more expensive condos as an alternative.
Months of Supply Finding its Level
Months of Supply, a metric that measures supply and demand (lower numbers reflect a more competitive market, favoring sellers), seems to be leveling off with relatively similar Q4 2021 and Q1 2022 readings in Arlington (~1.25 months) and DC (~2 months) after sharp increases during the first 18 months of the pandemic.
From a housing economics perspective, these readings suggest a strong sellers’ market in which one can expect competition and price appreciation. It will be interesting to see if this plays out in Q2 as more supply comes to market (Q2 brings the most inventory to market) while interest rates rapidly increase.
Sales Noticeably Slower in Arlington and DC
Despite signs of a strong, more competitive market, the overall pace of the market remains relatively slow with average days on the market for Arlington and DC hovering just under 40.
Active and New Listing Volume Still High
The number of condos being listed for sale in Q1 2022 was less than a year ago, but still high relative to the previous Q1 listing volume in Arlington and DC. This fact makes it impressive that Months of Supply (measures supply and demand) has dropped to strong seller market levels because it shows that, despite an unusually high number of people moving out of condos, there’s significant demand to absorb the new inventory.
Looking forward, I expect that higher interest rates will have a much more immediate and significant impact on condo demand than on single-family and townhouse demand and I think that Q2 condo data will reflect that.
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.
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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.
