2019 Arlington Real Estate Market Review: Detached/Townhouse

Question: How did the Arlington real estate market do in 2019?

Answer: Arlington’s real estate market made the national news cycle more than a few times in 2019 with some pretty extraordinary references to rapid appreciation – some accurate and some not. I’ve seen prices in some pockets of the market surge 15-20% in 2019, but for most of the market, appreciation was strong but not eye-popping.

Overall, the average and median price of a home sold in Arlington in 2019 was $705k and $610k, a 6.3% and 8.9% increase over 2018, respectively. Average days on market dropped by one week and an incredible 61.4% of buyers paid at or above the seller’s original asking price. The number of homes listed for sale in 2019 dropped about 17% compared to 2018 and demand surged, with buyers absorbing about 67% more inventory in 2019 than in 2018.

Last week I looked at how Arlington’s condo market performed in 2019 and this week we’ll dig into the performance of the detached and townhouse/duplex markets. I did separate write-ups on the 22202 (Amazon zip code) condo and detached home markets last month and decided not to include data from 22202 in most of the analysis for this week.

Arlington Detached/Townhouse Market Performance

First, we’ll take a look at some of the key measures for market performance across Arlington and within North and South Arlington. I’ve listed some highlights below, followed by a summary data table:

  • Median detached home prices increase by 6.7% from $890k in 2018 to $950k in 2019
  • Median townhouse/duplex prices increased 8.5% from $530k in 2018 to $575k in 2019
  • Average detached homes prices increased by an average of 5.1% and townhouse/duplex homes by 3.6%
  • South Arlington appreciated more than North Arlington, particularly in the less expensive townhouse/duplex market
  • On average, a detached home in North Arlington is 55.5% more expensive than a detached home in South Arlington and 76.9% more expensive for townhouse/duplex homes
  • Buyers accomplished very little trying to negotiate with sellers, averaging just 1.1% off original asking prices on detached homes and paying an average of 1% over the original asking price on townhouse/duplex homes
  • The number of new detached homes sold in 2019 was just below the trailing five-year average. Note that not all new homes make it in the MLS, so the actual count is likely a bit higher.
Performance By Zip Code

Next let’s take a look at average prices for both detached and townhouse/duplex homes by zip code:

  • Over the last five years, the top performing zip codes have been 22202 (National Landing) and 22209 (Rosslyn area), with Amazon HQ2 and Nestle leading the way in the commercial sector for those zip codes, I wouldn’t be surprised to see this trend continue over the next five years
  • Nearly all of the appreciation for 22202 came from 2019’s Amazon bump
  • If I remove new construction sales from the data, the appreciation percentages remain relatively similar for every zip code except for 22203 and 22213. Without new construction included, 22203 gained 4.5% (instead of zero change) and 22213 gained .5% (instead of dropping 2%), in 2019.
Additional Charts/Market Highlights

In each quarter last year, the market produced an average of 15% fewer detached homes in 2019 than it did during the same period in 2018. Interestingly, the market produced more townhouse/duplex homes in the 1st and 4th quarters of 2019 than the same periods in 2018.

https://cpp1.getsmartcharts.com/chart/mls/1/getreport.php?rid=2&ftid=2&fid=1001,1004&gty=4&ltid=4&lid=51013&gid=2&cc=dd0000,05c500&sid=1&mid=2&tt=2&mode=4

Within the detached home market, lower (+5%) and mid-priced (+6.4%) homes appreciated more in 2019 than the upper-end (4.3%) of the market. I think we will see an even sharper appreciation in the lower 25% of the market in 2020.

Since bedroom count is such an important factor in most homebuyer’s criteria, I thought it’d be interesting to take a look at the average cost of a home in 2019 by the number of bedrooms it had. Not much explanation needed for this one!

Looking Ahead

I will be keeping a close eye on inventory levels as this year starts off. However, I think demand is so high that it would take a significant increase in inventory to slow price appreciation in 2020.

With rates remaining low through last year and projected to do so again this year, coupled with strong employment rates and stocks, buyer confidence is high. On the flip side, markets usually stagnate heading into a Presidential election so it’ll be interesting to see if/how the election effects counter the current momentum.

I think that over the next 5-10 years, detached home prices will appreciate significantly as demand rapidly increases with employment growth, yet we will not be able to introduce any meaningful supply increases due to limits on available land. Condo supply and even townhouse/duplex/triplex supply can be increased with development and changes to zoning laws, but it’s unlikely we will be able to add more supply to the detached market other than one-for-one replacements (tear-downs) and the occasional subdivision of a larger lot.

Thanks for reading along! If you have any questions or I can be of any help with your real estate needs, don’t hesitate to reach out to me at Eli@EliResidential.com.

The Real Story About 22202 Property Values (Amazon Zip Code), Part 2

Question: I have read articles about the 22202 zip code suggesting everything from extreme appreciation to homes now selling for pre-Amazon prices. Can you shed some light on what’s actually happening in that market?

Answer: A few weeks ago, I wrote part one, focusing on the performance of the 22202 (Amazon Zip Code) condo market so this week we’ll take a look at how the detached single-family market performed in the neighborhoods bordering Amazon HQ2.

One of the issues I mention in Part 1 is how much misinformation has been published elsewhere about price appreciation in 22202 and the Arlington/Alexandria markets.

This two-part column is one of my attempts to provide an accurate picture about what’s actually happening in our real estate market. The key takeaway is that the market performed very well (if you own, not if you’re a hopeful buyer) following the Amazon HQ2 announcement, but prices haven’t skyrocketed the way many articles would lead you to believe.

Market Make-up

The 22202 market offers a diverse supply of housing. This year, condos have sold from as little as $195,000 for a 500sqft studio to $1,250,000 for a 2,900sqft 3BR/3BA penthouse. The least expensive detached home sold for $630,000 to be torn down and the most expensive a 6BR/4.5BA for $1,600,000.

Homes in the area tend to be pretty old with most detached homes being built prior to the 1960s and only one condo building has delivered since 1990.

Of the 139 homes to sell in 2019, 78 were in condo buildings, 50 were detached homes, and 11 were townhouses.

22202 Detached Single-Family Performance

The tables below represent sales in 2018 and 2019 split between those that went under contract before and after Amazon’s HQ2 announcement on November 13 2018:

PeriodAvg Sold PriceAvg Sold to Org Ask PriceAvg Days on Market# SoldTax Assessed Value
Post-Amazon$995,739100.6%1353$829,742
Pre-Amazon$911,47097.6%4172$802,120

Like elsewhere in Arlington and the 22202 condo market, inventory levels took a big hit in 2019, dropping 33% from 75 sales in 2018 to 50 sales in 2019. Sales volume had ranged consistently between 69 and 76 sales since 2015.

The decline in sales certainly was not due to lack of demand, rather fewer properties hitting the market. This is evident from the sharp drop in average days on market (down 63%) and sharp increase in the average sold price to original asking price ratio (up 3%). In fact, the detached home market was so competitive that the average buyer paid over asking price.

Detached home prices in 22202 increased by an average of 9.2%, from $911k to $996k, and the median value increased by 8.5%, from $876k to $950k. Detached homes in the area vary so much from sale to sale that you can’t take the average or median price growth and apply that level of appreciation to all individual homes. When I dug into individual comparable sales pre and post Amazon announcement, I found that homes below ~$1M appreciated noticeably more than those above $1M, by about 12-15% and 5-8%, respectively.

Here are a couple of tables for those of you who want to get really far into the data. The first shows how the lower, middle, and upper quartiles changed between 2018 and 2019. The second shows how sales were distributed between different prices ranges.

Price RangeLow PriceHigh PriceAvg Price2018-2019 Increase
Pre-Amazon Lower 25%$485,000$746,888$669,784 
Pre-Amazon Middle 50%$753,000$1,049,000$869,592 
Pre-Amazon Upper 25%$1,049,000$1,537,250$1,226,846 
Post-Amazon Lower 25%$630,000$825,000$739,30810.4%
Post-Amazon Middle 50%$830,000$1,145,000$975,85212.2%
Post-Amazon Upper 25%$1,162,500$1,600,000$1,319,8227.6%
Price Range# Sold% of Sales
Post-Amazon53 
<$775k1018.9%
Middle2445.3%
>$1,125,0001935.8%
Pre-Amazon72 
<$775k2230.6%
Middle3650.0%
>$1,125,0001419.4%
22202 Tear-Down Sales

I also looked at how the Amazon announcement impacted the cost of homes being torn down (for new construction) and found that the average cost of buying a tear-down increased by 13.7% or 16.2%, depending on which data point you use. Note: I limited the data set to homes sitting on 5,000-10,000sqft lots and not all tear-down sales are entered into the MLS.

PeriodAvg Sold PriceAvg $/Sqft (lot size)# Sold
Post-Amazon$730,556$1159
Pre-Amazon$642,592$9914

I hope anybody living in or hoping to buy into the 22202 zip finds this data useful and the rest of you find it interesting! I’m going to start working on my 2019 Arlington housing market review and hope to have that published in the next few weeks.

If you ever want to meet/talk about the market or your plans to buy, sell, or invest in the DC Metro area, don’t hesitate to reach out to me at Eli@EliResidential.com.

Making Up For A Questionable Housing Report

Question: I recently read an article by the Sun Gazette that median price per square foot was down since last year in Arlington and the rest of Northern VA. Is that what you’re seeing in the market, despite reports of prices going up?

Answer: I read that article as well and was equally confused by the statistic that $/sqft was down 6.8% in Arlington in the first nine months of 2019 compared to the first nine months of 2018. While this data point may be technically correct, it doesn’t accurately represent what’s happening in the Arlington/Northern VA marketplace. Even without having access to the data behind it, does anybody believe that with all the news about the Amazon-effect on Arlington’s real estate market, that people are paying less per square foot in 2019?

Price-per-square-foot Is Actually Up (obviously)

The truth is that while the median $/sqft did drop year-over-year in the first nine months of 2019, it was actually due to a shift in the type of inventory that sold, not because buyers are getting more for their money. As I pointed out earlier this year in an article about a national news story on Arlington’s real estate market, it’s easy to find market data that sounds interesting (aka generates reader clicks) but doesn’t tell an accurate story.

When I drilled into the 2018 vs 2019 data on median and average $/sqft, I found that within comparable sub-markets (e.g. 2BR condos, 4BR single-family, etc) median and average $/sqft increased year-over-year. In fact, if you use average $/sqft instead of median, like the article references, there was a 9.5% increase across Arlington. In this case average is a better statistical measure than median, but of course the median $/sqft made for a better story.

Accurate Headlines From The First Nine Months

While I have the data together comparing the first nine months of 2019 to the first nine months of 2018, I’ll go ahead and offer up five headlines that accurately represent the Arlington real estate market through September 2019:

  1. The market is up, but not by as much as you might thing based on some new stories. The average purchase price in Arlington jumped 5.8% to just over $722,000.
  2. A lack of inventory drove total sales down by 8%, with the biggest drop-off showing up in the condo market which suffered from a 12.3% drop in sales, led by a 13.6% drop in two-bedroom condo sales.
  3. The price range of the middle 50% of homes jumped from $380,000-$864,300 in 2018 to $415,000-$916,000 in 2019, a 9.2% increase in the lower limit and a 6% increase in the upper limit. This indicates that the Amazon-effect is impacting lower price points faster than upper price points which makes sense because investors and other speculators are more likely to purchase at lower prices.
  4. Good properties sold much faster in 2019 with 62.7% of homes selling in the first 10 days, compared to 46.4% in 2018. The craziest stat? 85.5% of 2BR townhomes/duplexes sold within the first 10 days.
  5. Price growth in the 22202 zip code, the area surrounding Pentagon City and Crystal City aka National Landing aka Bezosville, led all Arlington zip codes with a 13.7% jump in average sold price.

If you ever run across market data you’re not sure about or would like a customized data analysis, please reach out to me at Eli@EliResidential.com.

New Condo Building, 2000 Clarendon, Banning Smoking

Question: Are there any smoke-free condo buildings in Arlington?

Answer: There is overwhelming support amongst condo owners in Arlington and the DC Metro to ban smoking in condo buildings, including within individual units and balconies. The problem is that it requires a two-thirds (or more) vote in all existing condo buildings to change the by-laws to ban smoking completely and only a handful of buildings have successfully done so.

2000 Clarendon To Be Smoke-Free, LEED Certified

I’d like to recognize The Bush Companies for making 2000 Clarendon, an 87-unit condo building currently under construction in the Courthouse neighborhood, for being the first developer in Arlington to ban smoking outright in the original by-laws. Per the by-laws:

“Smoking is prohibited inside the Condominium building. Smoking is prohibited outside the Condominium building except in designated smoking areas located at least 25 feet from all entries, outdoor air intakes, and operable windows. The no-smoking policy applies to spaces outside the property line used for business purposes.”

In addition to being smoke-free, 2000 Clarendon will also be a LEED Certified “green” building.

There is real demand in the Arlington condo market for smoke-free buildings and there will likely be multiple owners who choose 2000 Clarendon as their home because of the smoking ban. I believe that the decision by The Bush Companies to ban smoking will result in stronger sales and I expect more developers in Arlington and the surrounding DC Metro to follow suit.

On October 15th I’m hosting a panel and info session on smoking bans in existing condo buildings. If you are interested in attending or getting a recording of the meeting, please email me at Eli@EliResidential.com.

2000 Clarendon Sales Update

If you’re in the market for a condo in the Rosslyn-Ballston Corridor and aren’t aware of 2000 Clarendon, it’s because marketing has been very limited and nothing has been entered into the MLS yet (hopefully you saw my column introducing 2000 Clarendon in April). However, demand has been high enough without a full marketing push that over 50% of the units are already under contract.

The shift in demand within the Arlington condo market to larger units with 2+ bedrooms is evident at 2000 Clarendon, with impressive demand for their 2BR and 2BR+Den units and double-digit waiting lists. The 1BR+Den floor plans have been nearly as popular, but 1BR sales have lagged. I expect the 1BRs to move rather quickly once they’re entered into the MLS for broader distribution.

The developer is releasing units for sale by floor and to-date ten of the fourteen floors have been released with floors 9, 11, 13, and 14 yet to be offered. Some units on the upper floors are expected to have direct DC views.

If you’re interested in learning more about available units at 2000 Clarendon or other new condo development in Arlington or the DC Metro, feel free to reach out to me at Eli@EliResidential.com.

15 Minutes Not Enough For Homeowners Insurance

Question: How do I know that I have the right homeowner’s insurance coverage?

Answer: Most people will spend more time figuring out what movie to watch on Netflix than setting up homeowner’s insurance on their most valuable asset(s). Despite how fast and easy insurance companies make the process, you should be spending more time with a real person designing an insurance policy that fits your home and your risk tolerance.

Two weeks ago, ARLnow columnist Peter Rousselot wrote an article about a home flooded with sewage because of a back-up in the public sewer line that didn’t have proper Water & Sewer coverage and was denied coverage by the County, thus costing them almost $20,000 and a ton of headache. According to my insurance partners at Day, Deadrick, and Marshall (DDM Insurance), Water & Sewer Back-up Coverage is one of many things commonly missing from most homeowner’s insurance policies written by popular “fast and simple” insurance providers.

In addition to having the right coverage, a good insurance provider will also make sure you understand what is NOT covered that people often think is covered. Basement flooding from heavy rains is a good example of something that is often not covered, a lesson many locals have learned the hard way over the last few years. If you understand what isn’t covered, you may make different decisions on where and how you store valuables or where you invest in expensive renovations.

I asked the team at DDM Insurance what some of the most common mistakes are that they see in other homeowner’s insurance policies they review and outlined some of them below:

  1. Sewer Water Drain Backup (what was missing in the policy for the homeowner in Peter’s article): Applies to sump pumps, wells, toilets and piping within the structure.  Separate coverage applies to the breaking or freezing of pipes, but any other back-up or over run of these sewage systems within a home require this coverage and should be no less than $25,000.
  2. Additional Living Expenses:  It covers hotel bills, restaurant meals, and other living expenses incurred while your home is being rebuilt. Typically, most policies will cover 20% of the value of your home, but for those with lower valued homes, it may be appropriate to increase this limit.  In the event of a total loss, it is very reasonable for these expenses to be over and above that amount.
  3. Guaranteed Replacement Coverage on the Dwelling:  This provides additional coverage on the dwelling if there is a total loss, so the client gets a percentage over the dwelling coverage listed on the policy declarations.  Those percentage options are usually 25%, 50%, or 100%, so if you have $100K on the dwelling coverage, with this endorsement, you get up to $125K, $150K or even $200K.  This is a must because you never actually know what it will cost to rebuild until it has to be done.  The replacement cost estimators that insurance companies require to be done are only estimates so this endorsement gives people a cushion so they are not out of pocket in the event the house is totaled.
  4. Supply Line Coverage: This helps to defray the cost to replace the incoming/outgoing water and sewer lines from the street to the house.  This covers the cost to dig up the front yard, replace the busted pipe and then backfill/repair your yard. It often costs $5,000-$10,000+ for this type of work, depending how far your house is from the street and the amount of landscaping/hardscaping to dig-up/replace.

You should also consider who the actual insurer is because when a claim is filed, the quality of service and responsiveness of your insurer is critical. Like anything else you buy, the cheapest providers often render the cheapest service when called upon.

If your homeowner’s insurance was set-up online or without involvement by a real person with expertise in local insurance practices, I highly recommend getting another opinion from an insurance agency/provider who offers a more personalized review of your policies. I also don’t suggest taking those recommendations and sourcing the cheapest version of it elsewhere because oftentimes, the personalized service you get (or don’t get) building a policy is reflective of the quality of service you’ll get when a claim arises.

For a review of your current policies or help setting up a new policy, I highly recommend contacting Matt Deadrick (mdeadrick@ddminsurance.com or 301-937-1500 x13) at DDM Insurance, who I use personally and recommend to my clients.

What’s Driving Arlington’s 2018 Condo Growth?

Question: Are there specific buildings or sub-markets in Arlington that were responsible for the jump in condo values in the first half of 2018?

Answer: The most interesting data point that came from last week’s mid-year real estate review was that, for the first time in years, condo prices appreciated significantly from the first half of 2017 (9.1% growth). I received a number of emails from readers asking if this growth occurred across the entire condo market or in specific locations or buildings so this week’s column takes a deeper dive into the 2018 mid-year data for condos in Arlington.

 

Growth and Demand Increase Across the Market

The good news for condo owners in Arlington is that appreciation and demand increased across all markets in the first half of 2018. In fact, 63 of the 79 measures for appreciation and demand improved (if you’re a homeowner/seller). To test the market, I looked at average price and three demand indicators (days on market, purchase price to asking price ratio, and number of sales) broken out by zip code, building age, and price range. The data compares pricing and demand trends in the first half of each year for all condos sold in Arlington. Cells highlighted in green indicate improvement (for homeowners/sellers) in that category for 2018.

 

All Eight Zip Codes Appreciated

Demand indicators supported the price growth, with most zip codes seeing a faster pace of sale and buyers negotiate less off original asking prices. For those tracking new construction in Arlington, only 11 of the 98 sales in 22209 were in Key & Nash and it’s important to note that builders do not enter all of their sales into the MLS, so a large percentage of those sales are missing from the data. Note that 22205 is not included because of the lack of volume.

 

 

Older Properties Surged

Many older buildings in Northern VA are struggling to recover from their peak pricing from 2005-2007, which has left many owners in a difficult financial position. The strong appreciation seen in condos built before the 1970s will be a much-needed relief for many and proves that Arlingtonians and investors are seeing value in older, less expensive condos compared to their newer, amenity-rich neighbors built in the last 20 years. Check out the huge drop in average days on market for condos built in the 1950s or earlier!

 

 

Higher Demand at Every Price Point

Demand picked up the most for less expensive condos, but every price range saw at least two demand indicators increase in the first half of 2018.

 

 

If you own a condo in Arlington and would like to take advantage of the recent appreciation of your property, feel free to email me at Eli@EliResidential.com to schedule some time to talk about your options.