Avoid Gaps In Your Condo Insurance Policy

Question: My condo association carries an expensive Master Insurance policy, but my lender is requiring that I purchase my own individual policy. What coverage do I gain from the individual policy that the master policy doesn’t include?

Answer: Every condo association has its own (expensive) Master Insurance policy to cover the common elements, but there are substantial gaps between the association’s policy and what you’re personally liable for without an individual HO-6 policy. Most people shop for the cheapest, fastest individual insurance policy and apply just enough coverage to meet the lender’s requirements, but that may put you at risk.

To explain common gaps between master policies and HO-6 (individual condo) policies, I’d like to re-introduce Andrew Schlaffer, Owner and President of ACO Insurance Group. Andrew is an expert in Master Insurance policies and has helped multiple local condo association’s reduce their cost and improve their coverage since writing a column on the topic last year. If you’d like to contact Andrew directly to review your association’s master policy, you can reach him at (703) 719-8008 or andrew@acoinsgrp.com.

Take it away Andrew…

Increasing Claims, Increasing Coverage Gaps

The condominium insurance marketplace is facing challenges that will impact homeowners in 2021. Water damage is leading this list of challenges—according to the Insurance Information Institute, about one-third of homeowner insurance losses are caused by water damage and freezing. The DMV is home to many aging condo buildings that struggle with mitigating water damage losses and their impact on insurance.

As water damage claims continue to rise and property damage costs increase, many insurance carriers are beginning to make changes to their coverage offerings that may increase your risk exposure.

Master Insurance vs Individual Insurance Policy

Nearly all master insurance policies in this area are written on a Single Entity basis which means coverage extends to general and limited common elements but also extends within individual units to fixtures, appliances, walls, floor coverings, and cabinetry, but only for like, kind, and quality to that conveyed by the developer to the original owner.

Items not covered by the master insurance policy and are generally not the association’s responsibility include:

  • Personal Property (clothes, electronics, furniture, money, artwork, jewelry)
  • Betterments and Improvements (demonstrable upgrades completed after the initial conveyance)
  • Additional Living Expenses (the cost to live at a temporary location, storage fees, loss of rents)
  • Personal Liability (provides protection for bodily injury or property damage claims arising from your unit)
  • Loss Assessment (triggered only if there is a covered cause of loss and the master insurance policy limits are exhausted; this assessment would apply collectively to all unit owners)
  • Medical Payments (no fault coverage available for injured guests within your unit)

Condo owners should purchase an individual condo insurance policy (HO-6), which is also required by lenders. This policy can provide coverage for the items listed above.

Review Your Dwelling Coverage

Dwelling Coverage should be included in every HO-6 policy to avoid significant out-of-pocket expenses. Many condo associations can hold you responsible for expenses that fall under the master policy deductible that are caused by the owner’s act, neglect, misuse, or carelessness. Due to the rise in water damage losses, many insurance carriers are increasing their deductibles, which in turn spurs the need for homeowners to adjust their dwelling insurance limit.

In a recent instance, a condo suffering from significant water damage losses was required by its insurance carrier to increase the master insurance policy deductible from $10,000 to $25,000. In this community, each homeowner should have at least $25,000 of dwelling coverage to indemnify them for the deductible expense in the event a claim arises from their unit. If coverage is not available, the homeowner would either pay this expense personally or the association can put a lien on their unit.

Dwelling coverage should also include a homeowner’s betterments and improvements (improvements made above what the builder originally delivered), including those completed by prior owners. Most lenders will require at least 20% of the unit’s market value insured under this coverage as well. 

What Information to Share with Your Insurance Provider

You should always review the condo association’s governing documents and understand the applicable statutory requirements (i.e. Virginia Condominium Act) and lender requirements to verify their individual responsibilities, including maintenance/repair and insurance. Along with sharing the association documents, homeowners should also provide their personal insurance agent with the following:

  • What is the master policy deductible? ($5,000, $10,000, $25,000)
  • What approach is used for the condominium insurance coverage? (Single Entity)

My Recommendation for HO-6/Other Individual Policies

Thank you, Andrew, hopefully this helps at least a handful of readers better protect themselves.

I find that most buyers go straight for the path of least resistance and cheapest premiums for their insurance coverage. Adding coverage to your existing auto policy in 5-10 minutes probably means that nobody actually reviewed your association’s Master Insurance policy and thus you’re at risk of coverage gaps. Personally, I’d rather pay a bit more to know that my policies have been designed with some personal attention and reviewed annually for gaps. Andrew and his team can handle this for you as well.

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

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. 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 Ask Eli, Live With Jean playlist.

Who Is Responsible for Main Supply Lines?

Question: We bought an older home with original water and sewer lines. Who is responsible for the maintenance and replacement of these lines and how do I know if there’s a problem?

Answer: You are responsible for the main plumbing lines for water and sewage running between your home and the public lines. In most cases, the gas company is responsible for everything to and including the meter (attached to your home) and you’re responsible for the lines after the meter.

The main lines are usually buried under your front yard and replacement costs (water and sewage) often start at a couple thousand dollars and can easily exceed $10,000. Costs vary based on some key factors including:

  • Distance from the public line to your home
  • Pipe material
  • Type of excavation/installation (difficulty in digging up old plumbing, # of turns in new pipe)
  • Cost to return landscaping to original state (this is on you, not the County)

In most cases, Washington Gas will return your property/landscaping to its original condition, including hardscape and your lawn (even your driveway), after excavating for repair or replacement. It’s not a bad idea to find out where your gas supply line is and plan landscaping with that in mind.

Identifying Problems

The life expectancy on many of the most common materials used for main plumbing lines range from 50-100 years, but tree root growth, unnatural disturbances like new landscaping, corrosion, and pressure build-ups can cause leaks, blockages, and other damage that you should monitor.

The most effective and most expensive way to look for problems is to hire a plumber to scope the lines with a camera to see if there are any issues. The cost of doing this often exceeds $500 per line, but can give you piece of mind or early warnings of a problem.

If you don’t want to pay a plumber to scope your lines, you can monitor for signs of a problem:

  • Water Line: higher water bills, lower water pressure, flooding in yard when there isn’t rain
  • Sewer Line: slow drainage/clogs in multiple areas of the house, foul smell inside or outside, odd behavior from plumbing like bubbling sounds
  • Gas Line: if you smell a gas/rotten egg odor, hissing sound from a gas line/meter, hazy/cloudy near gas line, plants dying, issues with gas-powered appliances

Good To Know

Here are some other helpful tips regarding the main lines for water, sewage, and gas:

  • HomeServce USA, through Dominion Energy, offers insurance protection for the water supply line, sewer line, and in-home gas lines
  • In most cases, you can expect the gas company to have a utility easement on your property which allows them the right to access your property for repairs or replacement as needed. Check your survey/plat to verify this right of access.
  • Polybutylene pipes (grey plastic) were used from the 70s-90s and prone to breakage. If your sewer lines is Polybutylene, consider replacing them now.
  • Lead pipes (dull grey) were used in the early 1900s for water supply lines and risk leaching lead into your drinking water and should be tested or replaced
  • CSST (Corrugated Stainless Steel Tubing) became popular for gas lines in the early 90s and is often not property bonded which means a lightning strike can blow a hole in your gas line. Bonding your gas line is simple enough that most home owners do it themselves, although I must recommend you use a qualified Electrician.
  • These days, PVC/CPVC are the most common piping for the main water and sewer lines instead of the heavier cast iron/galvanized steel options that used to be the standard. Copper is still a popular choice for water lines, but more expensive and more difficult to install.

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

Answering Common Real Estate Timeline Questions

Question: I’m getting ready to buy my first home and wondering how long things will take during the process. Can you explain some basic timelines I should be aware of?

Answer: Timelines vary by regional markets quite a bit due to different customs, contract structure, or local/state governance. Below, I’ll offer a quick answer to common timeline questions I get as it relates to real estate in the greater DC Metro area.

1. How long does it take to close/settle on a home after an offer is accepted?

The median contract-to-close period in Arlington has been ~30 days since 2018, down from ~36-38 days a decade ago. Most sellers want to close as quickly as possible, so buyers who can close faster have an advantage. Be sure to talk to your lender about how long they need to close before signing off on your offer. Some bigger, national banks and credit unions often need 35-40+ days to close. Many of our local lenders can comfortably close in as little as three works (sometimes even faster).

2. How long does a seller (or buyer) have to respond to an offer/counteroffer?

Our contracts do not stipulate a response deadline so any deadline for a response must be written into the contract or otherwise communicated by the party who wishes to set a deadline. Technically, an offer/counteroffer can go on forever if it is never responded to or withdrawn.

3. When is the Earnest Money Deposit (EMD) due?

It is common for the EMD (usually 1-3% or more of the sale price) to be due to the EMD holder (usually the Title Co) within 3-5 days of going under contract. With such a quick turn-around for a substantial amount of cash, make sure those funds are in an account that you can quickly and easily transfer (wire or check) money out of. For a reminder on what the EMD is, here’s an article I wrote earlier this year.

4. How long do you have to complete a home inspection and decide whether or not to move forward with the purchase?

The game has changed lately for home inspections, which I wrote about earlier this year, but for buyers who can secure a post-contract inspection contingency, they usually have as little as two days to as many as ten days from going under contract to complete the home inspection and decide whether or not to move forward or submit their requests for repair or credit. The timing and type of inspection contingency are all negotiable terms and factor heavily into the strength of offer.

5. How long does the mortgage financing process take?

As noted earlier, this varies by the type of lender you choose to work with and can range from as little as 10-14 days to 45+ days. Here’s an article I wrote earlier this year highlighting the importance of choosing the right lender.

6. How long does it take to have an appraisal done?

In most cases, when you finance the purchase of your home through a lender, they require a third-party appraisal before approving the loan. In short, they need to make sure that the market value of a home, per the appraisal, is equal to or greater than the purchase price of the home (here’s the most relevant article I have, but I’ll do a deeper dive into appraisals soon). Most lenders will order the appraisal within a week of you going under contract and it usually takes a week or two for the appraiser to visit the home and submit the report, so the total time to get appraisal results back is usually 1-3 weeks depending on when it’s ordered and if it’s a rush order.

7. How long does the Attorney Review take?

An Attorney Review period is common in other jurisdictions (New York/New Jersey), but not here so there is no legal review period built into our contracts. It is rare that an attorney outside of the Title Company is involved in the transaction.

8. How long does it take to sign paperwork at closing/settlement?

For sellers, it often takes just 10-15 minutes and for buyers it usually takes 45-60+ minutes, depending on the size of the loan package and questions you have for the title attorney while signing.

9. When can you start moving into the house after closing?

You can walk through the front door and start moving in immediately following the closing, unless otherwise stipulated in the contract.

10. How long can a seller rent a home back from a buyer?

If a home is being purchased using a mortgage for a primary residence, the law states that a buyer must intend on moving into the home as their primary residence within 60 days, so the longest time a seller can rent-back (link to an article I wrote in 2019 on rent-backs) in that scenario is 60 days. If the buyer is paying cash or buying the home as an investment property, there are no restrictions on how long a seller can remain in the home after closing.

11. How long does the home search process last?

This is the question everybody wants to know but there’s no good answer for. I have worked with buyers who plan on buying a home 6-12+ months from starting their search and end up finding a home they love in the first week and have worked with buyers who want to buy right away and end up spending two years searching for the right home. If I had to estimate, I would say that most buyers find a home within 6-12 weeks of starting their search.

Remember that these timelines are not fixed and vary widely by jurisdiction/market across the country and a heavily dependent on the negotiations/circumstances of the buyer and seller on a specific transaction. Use these timelines as general guidance on the customs and common practices in the greater DC Metro area.

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

Should You Stage Your Home?

Question: Do you recommend staging for vacant homes?

Answer: When you stage a home, you are placing temporary furniture and accessories in a home while it is being marketed for sale. In most cases, I strongly encourage staging a home instead of leaving it empty.

The value of staging shows up in two critical parts of the selling/marketing process. It improves the quality of the photos by helping people understand the scale and purpose of a room. Better photos lead to more showings. Good staging also improves the way Buyers experience the home in-person during a showing. Better showings lead to better/more offers.

Figure 1: Great staging helped Buyers make sense of an otherwise large, open space at 3196 N Pollard St Arlington

In my opinion, the three main benefits to staging a home are:

  1. Add Life to Empty Homes: Walking into an empty house can be eerie and makes a home feel lifeless. Those are not feelings you want potential Buyers to have while walking through your home. Good staging can add energy and life to a vacant home.
  2. Help Rooms Feel Larger: This is counterintuitive, but most people perceive empty rooms as being smaller than they really are. I’ve experienced this on numerous occasions walking through empty rooms with Buyers who have trouble understanding how a bed or couch can fit into an empty room that is more than big enough for their furniture.
  3. Engage the Eye: Well staged properties keep Buyers engaged with room layout and functionality, but unstaged empty rooms allow Buyers to focus on flaws like paint scuffs, separating trim, poor lighting, and other things you’d prefer Buyers to overlook during their visit

You do not need to stage every room. In a larger townhouse or single-family home, that can get unnecessarily expensive. Prioritize the most important rooms like the living room, dining room, and primary bedrooms for the best return on investment. Accessorizing walls, countertops, and shelves also adds a lot of value.

Figure 2: Don’t forget about staging for outdoor spaces like this patio at 4645 4th Rd N Arlington

Good staging isn’t cheap, often ranging from ~$2,000-$10,00+ depending on the size of a home and type of staging furniture, but it should be looked at as an investment like anything else you do to prepare your home for sale like painting, cleaning, and landscaping. As a rule of thumb, I think that investing .25-.5% of the market value of a home generates a clear, strong return.

Cheap, thoughtless staging provides little or no value at all. Sticking a chair or two in the living room or simply laying a blow-up bed on the floor of a bedroom are not the same and provide little, if any, benefit.

If you intend on living in your home or leaving your existing furniture for the sale (photos and showings), consider “occupied” staging, whereby you hire a stager to help you maximize the use of your existing furniture and accessories. Just promise not to get offended if they recommend removing your favorite lime green shag carpet 

ies from the owner, with some add-ons from the Stager, in a great example of a successful Occupied Staging approach at 1276 N Wayne St #1230 Arlington

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

Smoking Bans Made Easy For Condos/POAs with New Law

Question: Do you have an update on the smoking ban bill you wrote about earlier this year?

Answer: Virginia House Bill 1842 (link) was signed into law by Governor Northam on March 18 2021 and became effective July 1 2021. The bill has major implications for owners of Condominium and Property Owners Associations (condo and POA) by giving the Association’s elected Board the ability to ban smoking inside homes and on private balconies by way of a new resolution to the rules and regulations, which generally requires a simple majority vote of the Board.

Prior to this, Boards could ban smoking in common areas this way, but smoking bans within units/homes required a lengthy (multiple years), costly, and resource intensive effort to get a 2/3+ vote from owners to change the by-laws.

I spoke with attorney Michael C. Gartner, a Partner at Whiteford, Taylor, & Preston LLP and current President of the Community Associations Institute (CAI) Washington Metro Chapter, about the new law to make sure I was clear on the implications this has for Virginia condos and POA communities.

Mr. Gartner confirmed that the new law, effective July 1 2021, does in fact allow condo and POA Boards to ban smoking inside private residences with a simple majority vote of the Board. He also offered some helpful advice and caveats for any Boards/communities who plan to move forward with in-unit smoking bans:

  • In rare cases, some by-laws may specifically restrict a Board’s ability to make certain rule changes or require something other than a simple majority, so Boards should have an attorney review their by-laws prior to proceeding with a smoking ban
  • Smoking bans should be written as a compliant resolution through legal counsel, not as a simple motion
  • Enforcement is always a challenge for Boards (noise, trash, and other common rules always present enforcement challenges) and Boards may want to work with their legal counsel to establish compliant enforcement protocol
  • The new law includes a provision that allows owners to call a special meeting to vote and repeal a change in the smoking policy
  • Smoking ban policies might flip back-and-forth as new Boards are elected and the majority votes for a new/different smoking policy than the previous Board

I’m not aware of any other state that has passed legislation like this (please comment if you know of other similar laws) in the rest of the Country, which is amazing, considering Virginia’s political and economic history, that we may be the first state with this type of law.

It will also be interesting to see how the law holds up if/when it is challenged in court. Until then, however, Boards now have the ability to ban smoking within homes, on private balcony/outdoor spaces, and in all common areas by simply majority (except in the rare case by-laws restrict it).

If you would like assistance with reviewing your by-laws, drafting a smoking ban resolution, and/or create compliant enforcement policies (or any other legal needs for your Association) you can contact Mr. Gartner directly at 703.280.9267 or mgartner@wtplaw.com. His firm, Whiteford, Taylor, & Preston, LLP, has one of the largest and best-regarded community association practices in the mid-Atlantic region, representing more than 800 condominiums, planned communities and housing cooperatives, of all sizes and types, in Maryland, Virginia, the District of Columbia and Delaware. Their Community Association Section is made up of approximately 30 attorneys and an experienced professional support staff.

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

Demand Drops Regionally, Remains Competitive

Question: Is the housing market slowing down?

Answer: Over the last 2-3 months I’ve experienced a noticeable slowdown in the single-family and townhouse market relative to what we’ve experienced most of the last 12+ months. While slower than it has been, the market is still very competitive, and prices are holding.

Properties that would have gotten 8-10+ offers a few months ago might get 2-3 now. Escalations over asking are still common, but less extreme. And in some cases, Buyers can secure modest contingencies (inspection, appraisal, financing). I believe the main factors in this change are:

  • Buyers have distractions they didn’t have for much of the lockdown (vacations, events, commute, etc)
  • Asking prices are more reflective of market values now that 6+ months of closed sales in 2021 are available for market pricing analysis
  • Some Buyers have given up after months of struggling to find/win a home
  • Normal seasonal behavior. Demand usually subsides in the summer, relative to the previous spring.

Home Demand Index Readings

To put the receding demand into perspective, I pulled out some charts from the most recent Bright MLS Home Demand Index, which tracks regional and local demand by analyzing data ranging from buyer showing activity to closed sales to feedback from local real estate agents.

Demand in the overall Washington DC Metro housing market dropped 17% from June to July and 13% year-over-year. The July 2021 Demand Index reading of 123 is lower than the Demand Index reading in 10 of the last 14 months, with the four months from November 2020-February 2021 being the only months with lower readings since May 2020. July 2021 is also the first month with a year-over-year decline in demand over the last 12+ months.

Home Demand Index

The Index uses the same price ranges to track demand across all Bright MLS market centers (DC, Baltimore, Philadelphia) so the price ranges aren’t the best for the DC Metro/Arlington, but still provide a good indication of regional and local demand trends.

The Demand Index for single-family homes $395k-$950k dropped 19% from June to July and 9% year-over-year. For single-family homes over $950k, the Demand Index dropped 29% from June to July and just 2% year-over-year.

While these reports show significant drops in demand recently, the actual demand is still very high and is enough to support recent price appreciation.

Single Family Home $395K-$950K
Single Family Home Above $950K

Listing Volume Still High

The number of condos listed for sale over the last 12 months is significantly higher than any other 12-month period we’ve seen in Arlington, but July listing volume settled down to finish closer to historical averages than we’ve been seeing. This is a sign that the surge in condo supply may be tapering off while we’re also seeing condo demand increase relative to the 2nd half of 2020 and early 2021.

High market values and changing housing needs have also led to an increase in the number of single-family homes listed for sale in Arlington lately, but that volume is much closer to the historical average than what we’ve witnessed in the condo market. It also does not seem like it to most Buyers because demand has quickly absorbed the extra supply.

New Listings In Arlington County

Looking Ahead

There’s usually an increase in demand and homes listed for sale after Labor Day and I expect to see similar seasonal behavior this year until we reach the winter/holiday market starting around early November when demand and listing supply both tend to retract.

Historically, it has taken until late February/mid March for demand and listing volume to ramp up towards their spring peaks, but the last few years we’ve seen the ramp-up period, especially for demand, start in January. I expect a similar pattern next year, but will be surprised to see anything like the double-digit price appreciation that we experienced in 2021 repeat in 2022.

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

New Construction Homes vs Recently Built Homes

Question: How much more do new construction homes sell for compared to similar homes that were recently built?

Answer: Roughly 100 new construction single-family homes have sold each year in Arlington since 2015 (per BRIGHT MLS). The cost of a new home shot up in 2018 and again in 2020 and 2021, but the size, layout, features, and design of the homes have remained mostly consistent.

Table 1: Arlington New Construction Sales Since 2015

Now that we’re seeing more resales of recently built homes, I thought I’d take a look at how the price of new construction homes compares to similar homes built in the last 5-6 years. To do this, I looked at the 2021 sales of new construction homes vs the 2021 resales of homes built from 2015-2019 in the 22207 zip code (by far the highest volume of new/newer home sales in Arlington). I also removed a few outlier sales so that we have a more accurate comparison.

Figure 1: New Construction at 3196 Pollard St Arlington VA 22207 ($2.3M)

New construction homes sold in 2021 sold for 16.9% more than similar 2021 resales of recently built homes (built 2015-2019), however, new construction homes were an average of 22% bigger (based on total finished square feet) than 2015-2019 builds sold in 2021.

As a result, new constructions homes actually sold for a lower price-per-square foot on both above grade (not including the basement) and total finished calculations. Thus, one could argue that new construction, with its lower price-per-square foot and brand new systems (HVAC, appliances, roof, windows, floors, etc), is a better value…but it’ll cost you a lot more in dollars to get there.

It’s also worth noting that while you get brand new systems in new construction, a resale has (hopefully) already gone through the initial pains of breaking in the house and the inevitable issues that come up for owners of new construction. You may also find that the first owners have invested in some improvements that a builder may not have such as upgrade exterior living spaces or landscaping.

Table 2: New Construction vs Resale of Recent Construction

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

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.

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.

Off-Market Homes Sell for 17% Less

Question: Do homes sold on-market sell for more than homes sold off-market?

Answer: I want to start by saying that I know that this column comes off as being a shameless/salesy pitch for Realtors, but those of you who have followed my columns over the years hopefully recognize that I focus on informative, data-driven articles and steer clear of using this platform for sales pitches for myself or my industry.

With that said, I’m sharing this recent study of off-market vs on-market sales released by BRIGHT MLS (link to my column explaining what MLS/BRIGHT MLS is) because I think that they did a good job solving for the right answers in the data (not just favorable answers) using a massive sample size, filtering out the right data, and using a number of different cross-sections to confirm the findings within more specific datasets.

Study Overview

You can download and read the full study at the first link in the paragraph above (also linked here). The study included nearly 443,000 sales in 2019 and 2020 in the three BRIGHT MLS Metropolitan Statistical Areas (MSA) of greater Washington DC, Baltimore, and Philadelphia markets. The researchers compared about 116,000 off-market sales (using public records data) to about 327,000 comparable on-market sales.

What is On-Market vs Off-Market?

An on-market sale is a sale that is listed and marketed on the BRIGHT MLS platform, which provides mass syndication/distribution to the 95,000 real estate agents in the BRIGHT network (includes VA, MD, DC, PA, DE, and WV), brokerage websites, and most 3rd party consumer-facing sites (e.g. Zillow). An off-market sale is one that is not listed on the BRIGHT platform and either sold without any online marketing or only placed on a brokerage and/or 3rd party website for marketing. Off-market sales can take many forms, but are ultimately defined by the lack of market exposure via the BRIGHT platform.

Results Favor Selling On-Market

Across the entire dataset, homes that were sold on-market sold for 16.98% more, based on the median price of comparable sales. Here’s a screenshot from the study showing the cross-section of the Washington DC MSA (extends all the way into WV).

I’d like for this study to report on more cross-sections of the market and include larger and smaller homes, different price points, condo vs single-family, and more because I think it’s all really valuable data to help consumers make decisions about the sale of their home. There are certainly scenarios where sellers might benefit from an off-market sale or an off-market sale makes sense for reasons beyond a seller’s bottom line, but having as much data as possible to help people make educated decisions is key.

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

Arlington Condo Mid-Year Review

Question: How has Arlington’s condo market performed in the first half of 2021?

Answer: Given the tremendous appreciation we’ve seen locally and nationally on prices for single-family homes and townhouses, the mostly unchanged values of condos in Arlington highlights how much the condo market has struggled compared to the rest of the housing market. We did experience some periods of value loss in the last quarter of 2020 and early in 2021, but the first half data (and my experience in the market) suggests that prices have recovered and leveled out to about the same values we saw in 2019.

The biggest question I have is whether we will sustain these prices or see a slow decline as people adjust to new work arrangements and housing preferences in the wake of COVID. While it’s possible that we could see a delayed price surge due to sustained low interest rates and returns to offices, I think that scenario is unlikely.

This week we will take a look at Arlington’s condo market in the first half of 2021. Note that the data does not include Cooperatives (e.g. River Place) or age restricted housing (e.g. The Jefferson).

Prices Relatively Flat, Listing Volume and Inventory Up

I think the biggest story in the condo market for Arlington and the DC Metro area is the historically high number of condos being listed for sale since Q3 2020. There is clearly a flight out of condos by homeowners and investors and the demand is not high enough to absorb the extra supply, so inventory levels have returned to 2015-2016 levels when we were in the midst of a near zero-growth condo market (in Arlington).

The return to 2015-2016 inventory levels isn’t a bad thing, but the suddenness of that shift was difficult for sellers to manage after we experienced a red-hot condo market from late 2018 (Amazon HQ2 announcement) to early 2020 (pre-pandemic).

Demand Metrics Down, Disaster Avoided

Demand metrics like days on market, percentage of homes selling within a week, and the percentage of sold price to the original asking price are all down to 2017-2018 levels (pre-Amazon announcement) and prices are more reflective of what we saw in the first half of 2019.

During the pandemic, there were concerns of a fundamental shift in the condo market that would lead to a significant re-pricing of condo values but that’s clearly not the case. Sure, it’s tough for condo owners to take a step backward while the single-family/townhouse market surges ahead, but the condo market looks to be recovered and safe at this point.

If you’re interested in seeing last week’s mid-year analysis of the single-family housing market, you can check it out here.

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

Arlington Single-Family Home Mid-Year Review

Question: How has Arlington’s single-family housing market performed in the first half of 2021?

Answer: The news has been full of stories and data about the explosion in real estate prices and intense competition for single-family homes across the country. Arlington has been no exception.

This week we’ll take a look at some charts and data that highlight what we’ve experienced so far in 2021 for single-family homes (SFH) in Arlington.

Overview: Prices Up, Listing Activity Up, Inventory Down

The year-over-year median price for SFHs increased 8.6% in Q1 and 20.6% in Q2 (remember that Q2 2020 had end-to-end strict COVID lockdowns), with both quarters exceeding a median price over $1.1M, the first time that has happened in any quarter in Arlington. If you want to skip 2020 because of COVID, Q1/Q2 median prices in 2021were up 17.4% and 21.1%, respectively, compared to 2019 median prices.

After back-to-back years of below-average listing volume, the number of SFHs listed for sale in the first half of 2021 exceeded 900 homes for the first time since 2017 and ended up well above the 10-year first half average of ~860 homes listed for sale during the first half.

Despite strong listing volume, active inventory hit a 10+ year low due to demand outpacing new supply. We finished Q2 with 1.3 months of supply, which is about twice as high as Loudoun County, which is struggling tremendously with inventory levels.

Bye-Bye Affordability

Of the six zip codes with enough SFH supply to generate reliable data (22206, 22209, and 22213 don’t have enough SFH sales), only one had an average sold price below $1,000,000, compared to four in 2019!

One of my biggest takeaways from the 2021 market so far is just how quickly prices have increased in the least expensive neighborhoods. The two zip codes with the lowest average SFH price, 22203 and 22204, increased by 16.8% and 20.7%, respectively, from the first half of 2020, while the four most expensive saw increases ranging from .4% to 8.8%.

In 2020, the average home in 22201 (most expensive zip code) was 95% more expensive than the average home in 22204 (least expensive zip code). In 2021, the gap closed quickly with the average 22201 home being 62% more expensive than the 22204 average.

Price Distributions Skew High

While the largest volume of sales still falls in a sub-$1,000,000 range, the price distribution in Arlington skews high. Despite the high average/median prices, Arlington doesn’t have much of an ultra high-end market, with just three sales over $3M and just two SFH sales over $3.5M in the last five years.

Prior to this year, the percentage of sales under $800k was always greater than the percentage of sales over $1.5M. In the first half of 2021, not only were there a higher percentage of sales over $1.5M but the number of sales over $1.5M nearly doubled the number of sales under $800k!

Demand Intensifies

Arlington had more time than other markets to adjust to such intense demand because the market really took off after Amazon announced plans for HQ2 in November 2018, but the pressure of COVID and low interest rates have intensified that demand.

The number of homes sold within one week and the numbers of homes sold at or above the asking price both exceeded 60% of total sales for the first time.

Looking forward, it’s hard to see market conditions changing too dramatically any time soon. Things have slowed down a bit off peak demand as is usually the case in the summer and around the holidays, but I expect another strong fall season and a quick pick-up in January/February 2022 from a holiday lull.

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