Condo Smoking Bill Passes in Virginia

Thank you to the ARLnow reader who brought Virginia House Bill 1842 to my attention because it is likely to be a game-changing law that will allow condo Boards to more easily ban smoking inside units and on balconies, not just in common areas. As of February 17 2021 the bill passed the Virginia House and Senate and, per my conversation with staff of the bill’s sponsor, Delegate Mark Keam, it is now on its way to the Governor’s desk to become Virginia law as of July 1 2021!

This is incredible news for many condo owners/residents who have suffered from the health and environmental hazards of a neighbor who smokes inside their unit or on their balcony. Over the years, I’ve written more about condo smoking bans than any other non-market related topic because of how much interest and positive feedback I received on the topic. So much so that in 2019 I hosted a panel discussion about it.

A full summary of the bill is pasted later, but the key text from the bill includes “…the executive board of a condominium unit owners’ association to establish reasonable rules that restrict smoking in the condominium, including rules that prohibit smoking in the common elements and within units…”

Under current laws, a smoking ban within units can only be done by way of a formal by-law amendment, which can be overly burdensome for most communities and take years to see through. The only “easy” smoking ban allowed by law was a ban in general common areas. Even limited common areas (e.g. balconies) require a by-law change under the current laws.

I am no legal expert and I’m sure the language in the bill can be interpreted a number of different ways, but this bills seems to give condo Boards/owners a very good chance of banning smoking within units. I’d love to hear from any readers who have the legal background to interpret just how likely or unlikely the language in this bill is to allow complete smoking bans.

Here is a link to details about the bill and the full summary below:

Property Owners’ Association Act; Condominium Act; rulemaking authority of property owners’ associations and unit owners’ associations; smoking. Permits (i) except to the extent that the declaration provides otherwise, the board of directors of a property owners’ association to establish reasonable rules that restrict smoking in the development, including (a) rules that prohibit smoking in the common areas and, (b) for developments that include attached private dwelling units, rules that prohibit smoking within such dwelling units, and (ii) except to the extent that the condominium instruments provide otherwise, the executive board of a condominium unit owners’ association to establish reasonable rules that restrict smoking in the condominium, including rules that prohibit smoking in the common elements and within units. The bill clarifies the authority of executive boards of condominium unit owners’ associations to establish, adopt, and enforce rules and regulations with respect to the use of the common elements of the condominium and with respect to such other areas of responsibility assigned to the unit owners’ association by the condominium instruments, except where expressly reserved by the condominium instruments to the unit owners. The bill also permits unit owners, by a majority of votes cast at a meeting of the unit owners’ association, to repeal or amend any rule or regulation adopted by the executive board. This bill is a recommendation of the Virginia Housing Commission. Property Owners’ Association Act; Condominium Act; rulemaking authority of property owners’ associations and unit owners’ associations; smoking. Permits (i) except to the extent that the declaration provides otherwise, the board of directors of a property owners’ association to establish reasonable rules that restrict smoking in the development, including (a) rules that prohibit smoking in the common areas and, (b) for developments that include attached private dwelling units, rules that prohibit smoking within such dwelling units, and (ii) except to the extent that the condominium instruments provide otherwise, the executive board of a condominium unit owners’ association to establish reasonable rules that restrict smoking in the condominium, including rules that prohibit smoking in the common elements and within units. The bill clarifies the authority of executive boards of condominium unit owners’ associations to establish, adopt, and enforce rules and regulations with respect to the use of the common elements of the condominium and with respect to such other areas of responsibility assigned to the unit owners’ association by the condominium instruments, except where expressly reserved by the condominium instruments to the unit owners. The bill also permits unit owners, by a majority of votes cast at a meeting of the unit owners’ association, to repeal or amend any rule or regulation adopted by the executive board. This bill is a recommendation of the Virginia Housing Commission.

State of the Arlington and Northern VA Housing Market

Question: How is the real estate market doing so far this year?

Answer: 2020 ended with a surging single-family and townhouse market, especially further west, from buyers looking for more house and yard space, but a struggling condo market from an unusually high volume of condo inventory for sale and tepid condo demand. So what have we seen in the first six weeks of the 2021 real estate  market?

Single-Family and Townhouse Prices Up

The single-family and townhouse market is appreciating even further above where prices settled in 2020, with more competition (double-digit multiple offers). Through deals I’ve been involved in and conversations with colleagues, my unofficial estimate is that many single-family homes and townhouses are selling for 5-10% more than 2020 prices. I’m seeing this type of appreciation at all different price points too.

Condo Market Better, Slow Improvement Expected

The condo market worsened monthly from about June 2020 – November 2020, but reversed course a bit in December and remained slightly improved in January. I see the condo market picking back up at a slow pace and likely to continue improving through the spring, as demand hopefully/probably picks up, but I don’t see a return to the pre-COVID condo market any time soon.

Let’s take a look at some key charts for Arlington and Northern VA (Fairfax and Loudoun County)…

Arlington Months of Supply

Months of Supply is one of my favorite metrics because it combines supply and demand. The lower the Months of Supply, the more favorable a market is for sellers. Housing economists say that a well-balanced market has about six months of supply.

Single-family homes in Arlington hit an all-time low for Months of Supply in December and January, coming in at just a touch over one month, while the condo market has settled into just under 2.5 months of supply, which is about average for Arlington condos, save the two years after the Amazon HQ2 announcement.

New Listing Volume in Arlington

The number of condos listed for sale in January remained high, coming in 66.7% higher than January 2020. The number of single-family homes listed for sale remained stable, with an increase of just 11.9% over January 2020.

Dramatic Shift in Fairfax and Loudoun

If you think buying a house in Arlington is difficult, just try buying a house in Fairfax or Loudoun County, where single-family Months of Supply has dropped below one month to 2-3 weeks! This represents a much bigger shift in market conditions than what we’ve experienced in Arlington, which has been more competitive for longer.

Northern VA Condo Supply

All three Northern VA counties charted below (Arlington, Fairfax, Loudoun) have seen a spike in condo supply over the last 6+ months, but condo absorption has actually increase by enough in Loudoun County to not only offset the increase supply, but cause Months of Supply to drop to 10+ year lows of two weeks. Arlington County and Fairfax County have gone the other direction, with significantly higher Months of Supply.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

Market Values 18.2% Higher Than County Assessments

Question: How accurate are the County’s tax assessment when it comes to determining the market value of a home?

Answer: Arlington’s property tax rate will remain unchanged in 2021 at just over 1%, but many homeowners will pay more in property taxes because of higher assessed values from the County. For those with plans to sell in the near future, the rapid appreciation of Arlington real estate values is a good thing, but for those with no plans to sell, appreciation simply means a higher annual tax bill.

If you’re upset by recent increases in your home’s assessed value, just know that you’re most likely getting a significant break compared to your home’s actual market value. Homes that sold in 2020 sold for an average of 18.2% (14.9% median) more than their most recent assessed value by the County. Last year, the average difference was 14.2% and the year before it was just 7.6%.

If County assessments were representative of actual market values, the average Arlington homeowner would pay just over $1,100 more per year in property taxes. So don’t forget to send the Department of Real Estate Assessments a Christmas card this year for such generous valuations 

Only 5.9% of homes sold for less than their most recent assessed value. On the other end of the spectrum, 6% of homes sold for 38% or more over their most recent assessed value.

Let’s take a look at the data!

Zip Code/Property TypeDifference of Sold Price to Assessed ValueStandard Deviation of DifferenceAverage Difference in Dollars
2220115.0%19.9%$104,341
2220219.3%15.6%$106,849
2220316.8%17.8%$90,066
2220418.5%12.9%$79,353
2220522.1%28.4%$176,473
2220619.0%10.8%$80,432
2220721.5%32.4%$188,480
2220913.0%11.1%$65,674
2221323.1%40.8%$171,539
Condominium15.7%11.2%$61,394
Detached/Townhouse21.1%27.7%$169,877
Arlington Total18.2%21.0%$111,887

If you believe that the County’s assessment of your home’s value is too high, you have the right to appeal the assessed value, but that must be done by March 1. Here are the key steps in appealing your assessment:

  • Your first appeal with the Dept of Real Estate Assessments must be filed by March 1
  • Step 1: Call 703-228-3920 for information on how your assessment was determined
  • Step 2: File your appeal online here (First Level)
  • Step 3: An assessor will visit your home and you can provide relevant info to make your case
  • Step 4: If you’re not satisfied with the decision or have not received written notice by April 1, file your second appeal with the Board of Equalization online here (Second Level) by April 15
  • Step 5: If you’re not satisfied with the decision, your final option for appeal is with the Circuit Court, which will likely require you to hire an attorney

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

2020 Housing Market Review: Single-Family Homes

Question: How did Arlington’s single-family housing market perform in 2020?

Answer: Despite the pandemic, the single-family housing market produced strong growth locally and nationally, primarily due to interest rates setting record lows throughout the year and a sharp change in housing criteria due to ongoing work/school-from-home demands. While Arlington experienced strong growth, less expensive markets further from DC saw sharp increases in demand and explosive growth.

More Expensive…

In Arlington, the average and median price for a single-family home increased by 4.9% and 5.7%, respectively, after similar increases in 2019. The growth showed up in all ends of the market, including Arlington’s most expensive homes, with another record-shattering year for the number of $2M-$3M homes sold. Only 17% of single-family homes sold for less than $800,000 and about half of those were tear-downs or required major renovations.

Volume Still Down…

Despite a very slow rollout of homes for sale in the first half of the year due to lockdown measures and pandemic fears, market volume caught up quickly in the second half of the year, ending up with 13 more homes sold in 2020 than in 2019, but still ~10% lower than 2015-2018.

Faster Pace Sales…

Average and median Days on Market dropped for the 5th year in a row to 7 and 22.2 days, respectively, and the percentage of homes selling in the first week increased for the 5th year in a row, hitting the 50% mark in 2020. The average and median price for a home purchase within the first week on the market was 1.1% and 2% over the asking price, respectively. The takeaway? If you’re searching for a home, be prepared to act quickly and pay above the asking price for something new-to-market.

Six Interesting Charts

Below, I put together a series of charts to visualize how the Arlington housing market performed in 2020 and how that performance compares to the 2015-2019 markets.

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

Analyzing the Pace of Housing Inventory and Demand

Question: When should I expect more homes to be put on the market for sale?

Answer: 2020 was an unusual year for housing inventory because we saw so little inventory come out during the spring, when the pace of new listings peaks, and an explosion of listings, especially condos, from late summer through the holidays. Here’s a link to a column I wrote that visualizes how unusual 2020 was for housing inventory in Arlington. Even though my analysis in this column and previous columns focuses on Arlington, similar patterns show up and can be applied across the DC Metro.

It is much more likely that the pace of new listings will follow a more traditional pattern this year, with the number of homes listed for sale increasing steadily from now to the spring, peaking for about mid-March to mid-May, and then dropping steadily through the rest of the year, with a brief post-Labor Day spike.

Weekly Pace of Listings, by Housing Type

I’ve always shared and seen monthly breakdowns of listing inventory, so I thought it would be interesting to break it down a bit further into a weekly chart and see if there’s a noticeable difference in the seasonal pace of new listings of single-family homes/townhouses and condos.

The following chart does just that and pulls data from the five years spanning 2015-2019 (I threw out 2020 because it’s an anomaly). The weekly percentages represent that week’s share of total annual listings. Note that the data for the first and last weeks of the year aren’t always full weeks because of how Excel calculates weeks.

As it turns out, the pace of listing inventory for single-family homes/townhouses and condos is nearly identical throughout the year, aside from a slightly higher pace for SFH/TH in the middle of the spring and a slightly lower pace for SFH/TH during the dog days of summer.

What can buyers looking for a home in 2021 take away from this chart? You can expect a significant increase in listings beginning around mid-February, buckle-up for the most options in April and May, plan your vacations in July and August, look-out for the post-Labor Day surge, and hopefully you’ve found your dream home by the holidays!

Weekly Pace of Listings, by Year

The pace of new listings remains pretty consistent year-after-year, as shown by the chart below. There were only a handful of weeks with unusually low listing activity, compared to previous years. I’m guessing there was major weather activity during those weeks that caused some homeowners to delay or accelerate their listings by a week or two to avoid the drag of bad weather.

The consistency you see in the five-year chart below is also reflected in longer (ten and fifteen year) charts, but those get a little too messy for display.

Weekly Pace of Listings and Contracts

The pace of listing inventory and contract activity is highly correlated. The “chicken or the egg” question is whether more/less listing activity drives more/less contract activity (demand) or does demand dictate listing activity or do buyers and sellers just have similar patterns of behavior and thus the pace of supply and demand naturally correlate?

I think that it’s mostly due to number three, a natural correlation of behavior patterns that cause the pace of supply and demand to move in tandem. This is also supported by data like the new-listing-to-new-pending ratios not being very seasonal.

Using the chart below, one could even make the argument that the best time to list a property for sale is the last 2-3 months of the year, when the pace of contract activity (demand) consistently exceeds new listings (competition). However, I’ve analyzed “success metrics” like days on market and sale-to-ask-price ratio based on the month a property is listed and overwhelmingly found that February-May/June produce the most favorable results for sellers.

I hope these charts were interesting and helpful to you! If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

2021 Interest Rate Projections

Question: Do you expect mortgage rates to increase in 2021?

Answer: Happy new year everybody! Historically low mortgage rates in 2020 were one of a few factors that drove real estate prices up across the country (except in the condo market). This time last year, the Mortgage Bankers Association and Freddie Mac each predicted that rates would remain near 2019 levels through 2021, with an average 30yr Fixed Rate hovering around 3.7-3.8% through that period.

As it turns out, rates averaged about a full percent less than those projections. Rates fell consistently throughout the year, except for a brief but sharp increase in mid-March when markets went crazy with the first news of COVID-related shutdowns, until the Fed stepped in with liquidity. Below are some charts from Freddie Mac showing average mortgage rates over the last 50, 10, and 1 year.

Average Mortgage Rates Since 1971

Average Mortgage Rates Since 2010

Average Mortgage Rates in 2020

Rates in 2021+

The Mortgage Bankers Association and Freddie Mac each predict that 30yr Fixed Rates will increase slightly in 2021 and hover around 3%-3.2% in 2021. Beyond 2021, the Mortgage Bankers Association sees rates averaging 3.6% in 2022 and 4.1% in 2023.

An increase to 4% or higher mortgage rates will likely cause the rapid appreciation we’ve seen over the last couple of years to slow down, but I don’t think it will lead to a pull-back in prices unless it is combined with a migration from the DC Metro due to major changes in telework policy.

If you’re considering purchasing in 2021, I wrote a column in 2019 about my favorite mortgage programs that you might find helpful. If there’s anything I can do to help you prepare for a purchase, don’t hesitate to email me at Eli@EliResidential.com.

Most Expensive Homes Sold in the DMV in 2020

Answer: Happy holidays to you and yours! I hope you are finding new ways to enjoy the season and connect with family and friends this year. I’m going to keep my final post of 2020 light and take a look at the most expensive sales in the DMV in 2020, something we all enjoy doing!

Despite its Missing Ultra High-End Market [sarcasm], Arlington boasts the most expensive sale in the DMV in 2020, by a LOT, with the sale of a massive estate along the Potomac River for $45,000,000. This price tag earns the new owner over 31,000sqft of living space, 3.2 acres, a 30-car garage, and gorgeous views of the Potomac River.

Listing and photo by Russell Firestone, TTR Sotheby’s International Realty (409 Chain Bridge Rd, Arlington)

Top 5 Most Expensive Sales in Arlington

Arlington’s five most expensive sales in 2020 include the region-leading $45M sale mentioned above and four sales ranging from $2.88M-$3.35M, including two condos in Rosslyn’s iconic Turnberry Tower.

Listing and photo by Nancy Taylor Bubes, Washington Fine Properties (1881 N Nash St #2301, Arlington)

Top 5 Most Expensive Sales in Alexandria

Alexandria’s five most expensive sales in 2020 include four homes in Alexandria’s new waterfront condo and townhouse community, Robinson Landing, and one incredibly unique single-family home on ¼ acre in the heart of Old Town (pictured below).

Listing and photo by MaryEllen Rotondo, McEnearney Associates (217 S Fairfax St, Alexandria)

Top 5 Most Expensive Homes in Fairfax County

Fairfax County’s five most expensive sales in 2020 include three homes in Great Falls and two homes in Mclean ranging from $5.6M-$24M. Pictured below is what $7M gets you in Great Falls – over 20,000sqft, 5 acres, and stunning landscape and architectural design.

Listing and photo by Piper Yerks, Washington Fine Properties (576 Innsbruck Ave, Great Falls)

Top 5 Most Expensive Homes in Loudoun County

Loudoun County’s five most expensive sales in 2020 include sales ranging from $3.75M-$16M. At a price tag of $16M, you could have secured a 1,550+ acre cattle farm in Upperville, surrounded by vineyards and a short drive to Middleburg.

Listing and photo by Kathryn Harrell, Washington Fine Properties (33542 Newstead Ln, Upperville)

Top 5 Most Expensive Homes in Washington DC

Washington DC’s five most expensive sales in 2020 range from $6.1M-$17.75M, with Georgetown commanding four of those sales. Want a 10,000sqft home with a detached 2-car garage and 6/10th of an acre in Georgetown? That’ll run you $17.75M in 2020.

Listing and photo by Michael Rankin, TTR Sotheby’s International Realty (1405 34th St NW, Washington DC)

Top 5 Most Expensive Homes in Montgomery County

Montgomery County’s five most expensive sales in 2020 range from $5.475M-$15M, including my personal favorite, a $10M mansion on Chevy Chase Circle sitting on nearly two acres (pictured below).

Listing and photo by Daniel Heider, TTR Sotheby’s International Realty (9 Chevy Chase Cir, Chevy Chase)

Top 5 Most Expensive Homes in the DMV, Outside the Greater DC Metro

The DMV’s five most expensive sales in 2020, outside of the greater DC Metro area, range from $6.2M-$10M, including four homes fronting the Chesapeake Bay. My personal favorite, pictures below, is a 36 acre waterfront estate just outside of St. Michaels, and includes a WWII replica fighter plane hung from the ceiling of the great room.

Listing and photo by Doc Keane, Washington Fine Properties (26310 Saint Michaels Rd, Easton)

I hope that was a fun tour through 2020’s most expensive homes in the DMV! Happy New Year everybody!

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

Positive Signs in the Condo Market, Finally

Question: Can you provide an update on how the condo market is doing?

Answer: Arlington’s condo market began shifting in favor of buyers this summer, after two years of a very strong seller’s market, when historical numbers of condos began hitting the market at the same time demand subsided. I’ve written about these changes four times since (falling values, visualizing high inventory, first signs of a trend, and first signs of a shift).

November Might be a Turning Point

For the first time since June, we’ve seen a reduction in the Months of Supply (MoS) of Arlington condos. Months of Supply is a great measure of supply and demand (lower MoS = stronger market with higher demand and less inventory).

While the reduction in MoS is slight, it’s a positive sign nonetheless that the market is either closer to finding its level again or may soon show signs of strengthening. However, one month, particularly a winter month, is not enough to establish any real change, we will need to see what the next 3-6 months bear.

Figure 1

Multiple Key Indicators Show Positive Signs

My hope for a settling or strengthening of the condo market is not solely based on one metric, there are other key metrics that suggest November may be the first month of a settling or strengthening condo market.

Absorption Rate (Figure 2), a measure of demand, increased ever-so-slightly in November, the first increase since May, albeit still down nearly 68% from the December 2019 Absorption Rate.

The number of condos for sale during November decreased for the first time since May (Figure 3), albeit slightly. The better news, however, is that the decrease in total condo inventory doesn’t seem to be caused by frustrated sellers pulling their condos off the market, rather due to promising contract activity (Figure 4), which was up 41% year-over-year in November.

Figure 2
Figure 3
Figure 4

Looking Ahead, Eyes on March-May

Over the next few months, I’ll be looking closely at whether these trends (stronger demand, falling inventory) continue, find a level, or revert back to what we’ve seen since this summer. I’ll be particularly interested in what year-over-non-COVID-year numbers looks like and if we settle into normal spring activity for inventory and demand.

For example, while the charts above are positive indicators for the condo market, Figure 5 shows just how much inventory (new listings) is still coming onto the market, with November generating nearly 79% more condo listings in 2020 than in 2019, but only a 41% increase in contract activity.

Figure 5

I think that March-May 2021 are going to be very interesting months, statistically speaking, and will be excellent indicators of what the market might look like for the next few years, until the next major market event (e.g. Great Recession, Amazon HQ2, COVID). I think/hope that by then, we will also have a better understanding of how the Federal Government and private companies will address teleworking beyond COVID and thus whether commute time will be prioritized differently by buyers.

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com

Deep Dive into Arlington’s Townhouse Market

Question: I need more living space and single-family homes are out of my budget, so I’ve been searching for townhouses in Arlington, but finding that the options are limited. Can you provide some guidance on what the townhouse market in Arlington looks like?

Answer: I spend a lot of time digging into the condo and single-family home markets, but not much time on the townhouse/duplex market. Why? Because townhouses and duplexes make up such a small part of our housing inventory. According to this Missing Middle Study, townhouses and duplexes make up just 5.9% of Arlington’s housing inventory (3.7% are townhouses).

Fortunately (for some), we’ve recently had an unusual surge in new townhouse developments hit the market including:

  • Arlington Heights: 27 townhouses developed by NV Homes, walking distance to the East Falls Church Metro, ranging in price from about $1.1M-$1.4M
  • Trenton Square: 19 townhouses developed by Madison Homes, near the intersection of Rt 50 (north side) and Glebe and a short distance to Ballston, starting at around $1M
  • Morrison Hill: 17 townhouses developed by Beazer Homes, near the intersection of Columbia Pike and George Mason (across from the new Harris Teeter), ranging in price from about $800k-$900k+
  • Towns of 24th: 8 townhouses developed by Evergreene Homes, in the Nauck neighborhood near the intersection of 395 and Glebe, starting in the mid-$800s
  • Park Nelson: 3 townhouses developed by District Line Development, in the Nauck neighborhood, ranging from $900k to $935k.
  • Townes at South Glebe: 16 townhouses across two sites developed by Christopher Companies, off of S Glebe between Columbia Pike and Shirlington, with prices starting in the upper $800s

Explanation of Data

For the data below, I looked at sales of townhouse and duplex properties over the last five years (except the last chart). I decided to separate these properties into ownership type: Condominium and Fee Simple.

Condominium ownership is generally used in multi-family buildings (apartment-style), but was popular in many of South Arlington’s townhouse communities in the mid 1900s. In condominium ownership, the HOA is generally responsible for what’s outside the walls of the home (roof, fencing, some plumbing, etc) and HOA fees are therefore (significantly) higher.

Fee Simple ownership means that you own the entire structure and the land your home sits on. The HOA fees are usually much lower because there’s less common ownership.

Over the last five years, we’ve had a nearly 50/50 split between condo and fee simple townhouse/duplex sales.

5-Year Townhouse Market Performance

Unsurprisingly, the townhouse/duplex market has followed the same general trends as the rest of the housing market, with a strong 2018, followed by a white hot 2019 and 2020, where the average townhouse/duplex sold for more than the asking price and 60% or more of homes listed sold within the first week.

Here are a few highlights from the data below:

  • There are a few ways of looking at appreciation here, but overall, the data suggests the townhouse/duplex market has appreciated ~20% in the last five years, with most of that coming in the last two years
  • The apparent drop in market value, by average sold price, of Fee Simple in 2019 is a misrepresentation of the market and due to the difference in the distribution of sales (more inexpensive/fewer expensive listings), the $/sqft tells a more accurate story for 2018-2019 Fee Simple pricing
  • The ~10% appreciation of the Condominium townhouse/duplex market (smaller, older, and less expensive than the Fee Simple market) in 2020 is likely due to buyer demand shifting away from similarly priced apartment-style condos in buildings towards private entry townhouse/duplex living with easier access to outdoor space (COVID related)
  • While quite different in size, price, age, and HOA fees, the Condominium and Fee Simple styles of townhouse/duplex ownership generally move in close parallel
Year Sold / Ownership TypeAvg Sold PriceAvg $/sqftAvg Sold to Org Ask $% Sold <7 days# Sold
2016$587,687$34999.0%39%441
Condominium$473,288$33398.8%38%260
Fee Simple$752,016$38199.4%42%181
2017$617,917$34599.1%40%558
Condominium$486,161$33399.4%43%313
Fee Simple$786,243$36798.8%36%245
2018$632,371$36799.2%45%533
Condominium$501,229$35899.3%47%292
Fee Simple$791,265$38199.2%44%241
2019$642,569$413101.0%60%481
Condominium$502,037$385101.4%63%220
Fee Simple$761,025$436100.7%57%261
2020$703,644$435100.4%62%561
Condominium$552,263$416100.8%61%267
Fee Simple$841,123$453100.1%63%294

What to Expect from Townhouse/Duplex Inventory

Below is a chart showing what your average Condominium and Fee Simple townhouse/duplex has offered buyers over the last five years of sales. While Fee Simple homes are roughly 43% larger, with an extra bedroom/bathroom, and about 25 years newer (likely to have a more open floor plan, larger bathrooms, and larger closets) the average Fee Simple home in 2020 was about $290,000 more expensive.

Ownership TypeAvg BedroomsAvg Full BathsAvg Half BathsAvg Total SqftAvg Year Built# Sold
Condominium2.21.90.51,41819591352
Fee Simple3.02.51.02,02519841222

Sales Since 2019, by Decade Built

I also thought it would be interesting to compare what inventory looks like based on the decade it was built. The following table details what you can expect to find in townhouse/duplex inventory by decade built, based on sales since 2019.

Below are a few highlights from the data:

  • There are three “generations” of townhouse/duplex inventory: 1930s-1950s, 1960s-1980s, and 1990s-current. In each “generation” the size of homes being built increased significantly.
  • The oldest, least expensive homes sell the fastest, with an incredible 71% of 1930s townhouses/duplexes selling within one week on market. On the flip side, the newest, most expensive inventory can take a little longer to sell, with less than 50% of these homes selling within one week. However, even at 40% and 47%, that is still a fast pace for any market.
  • Of the 1,012 townhouse/duplex homes sold since 2019, 279 (27.6%) had an attached garage. On average, a townhouse/duplex with a garage sold for just over $967,000 and 77% of these homes were built in the 1990s-2010s. 75% of homes with a garage had a two-car garage, representing only about 20% of total townhouse/duplex sales and requiring an average purchase price just over $1M.
Decade BuiltAvg Sold Price% Sold <7 daysAvg Total SqftAvg BRAvg Full BathAvg Half Bath# Sold
1930s$451,59371%1,0181.91.30.4129
1940s$535,77961%1,3612.21.90.1301
1950s$441,07154%1,1172.51.40.654
1960s$685,41760%1,8713.22.21.330
1970s$697,34163%1,9532.92.31.283
1980s$690,40867%1,6182.62.31.1198
1990s$966,94467%2,1283.12.61.399
2000s$1,057,05747%2,5603.22.61.260
2010s$979,36540%2,2183.53.21.188

For those of you exploring the purchase or sale of a townhouse/duplex in Arlington, I hope this information was helpful! If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

Condo Values Fall as Inventory Builds

Question: Have you seen a decrease in condo values with all of the inventory currently on the market?

Answer: Over the last few months, I’ve written about the shift in the condo market (links here and here and here), which began around July and can be attributed to a historical number of units listed for sale while demand simultaneously dropped due to COVID. Indicators such as Months of Supply, Absorption Rate, Days on Market, and Sold to Ask Price Ratios have shown a more favorable market for buyers for the last four months, but it takes longer to establish changes in pricing (need enough data).

It’s been my experience working in this market over the last few months that prices seem to be down about 2-5% in many sub-markets, compared to late 2019 and the first half of 2020 (after surging since 2018). However, I dug into the data a bit more to see how condos that went under contract after July 15 compare to the sales of condos that went under contract from Jan 1 – July 14 2020. I used July 15 because that is when I really start to see changes taking shape in the condo market.

One point I’d like to make prior to sharing the data findings is that the data is based on condos that have sold/closed and there are many condos still sitting on the market or under contract that won’t show up in this analysis. The market has also worsened (for sellers) each month since July, so properties that went under contract in July/August likely did better than those later on in the year. Therefore, it’s likely that as the units close that are currently struggling to sell, or just now coming to market, the data will get worse (larger decrease in values).

Data Summary

I chose to segment the market in a few different ways to get a sense of how different sub-markets are experiencing the condo shift. When comparing relatively small data sets (like we have here), the best conclusions can be drawn by analyzing market segments that have lot of similarities such as condos along the R-B Corridor built in the last 20 years or mid-1900s (older) buildings. Here are some highlights from the data sets I reviewed:

  • 1BR and 2BR condos along the R-B Corridor, built in the last 20 years, sold an average of 2.2% and 5.8% less, respectively, after mid-July. If you look at $/sqft, prices have dropped 1.1% and 3.6%, respectively. I believe this is the data set that most accurately reflects what’s happening in the condo market.
  • Older, less expensive condos across the County seem to have held onto their values better than newer, more expensive units. More expensive condos are closer in price to townhouses and I’ve seen more buyers favor lower-priced townhouses over higher-priced condos, as a result of COVID concerns. Buyers of less expensive condos don’t have many alternatives at that price point, other than renting.
  • The apparent appreciation of South Arlington since July 15 can be attributed to a different distribution of sales (higher volume of more expensive properties and lower follow of less expensive properties) than comparable units actually selling for more
  • The indicators (Sold to Ask, % Sold in <7 Days, and Days On) are what I find most interesting and a sign that the actual decrease in condo pricing isn’t fully reflected yet in the current data set:
    • Across every sub-market, including those where the average price didn’t drop, buyers negotiated significantly more off the original asking price. Earlier in the year, three sub-markets averaged buyers paying at least full price and since July 15 there were none.
    • The most interesting indicator is the huge drop in the percentage of units that go under contract within the first week.

Looking Forward

As I mentioned in the third paragraph, I expect future data sets for condos sold in the last quarter of 2020 and very early 2021 to show even larger decreases in values, relative to the first half of 2020. However, I think that with more positive news on COVID-19 vaccines, the start of the 2021 spring market, and more people returning to work (and realizing they value commuting convenience over extra space) I believe there’s a good chance the negative trends of the last 4-5 months will level off soon and begin to reverse by February/March.

I will continue to track trends in the Arlington condo market and provide transparency into what we’re experiencing. The townhouse and single-family home markets remain strong and I fully expect another appreciation cycle in 2021 for those sub-markets.

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.