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 Technically, an offer/counteroffer can go on forever if it is never responded to or withdrawn.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.

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.

2020 Housing Market Review: Condos

Question: How did Arlington’s condo market perform in 2020?

Answer: I ended up writing a lot about the condo market during the second half of 2020 because of the historically high numbers of units listed for sale from July to November, falling demand, and falling market values (compared to the first half of the year). However, there were slightly positive signs in the last month of 2020 and early weeks of 2021 that the negative trends are reversing. Despite a 2nd half that looked very different from the previous three years, 2020 overall was still a strong market for condos in Arlington. Let’s take a look at how things played out…

Prices Up, Volume Down, Pace Mostly Unchanged…

The average and median price of condos increased by 4.2% and 6.3%, respectively, a strong performance but a bit short of the nearly 8% growth in 2019. I wouldn’t be surprised to see no appreciation or slightly negative appreciation in 2021 as a result of changing housing priorities from COVID.

Despite the late surge of condos listed for sale, the number of condos actually sold in 2020 dropped 8.3% from 2019 and 19.3% compared to 2018.

The speed of the market remained relatively unchanged, with average days on market staying put at 7 days and median days on market decreasing slightly from 19 days to 18.4 days. However, my preferred “speed” metric, the percentage of units selling within one week, dropped to 48% in 2020 from 52% in 2019, but still well above 2018’s 29%.

Six Interesting Charts

Below, I put together a series of charts to visualize how the Arlington condo 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.

Single-Family Demand Shifting From City to Suburb

Question: Have you seen a shift in single-family home preferences away from DC/Arlington further out into Northern VA?

Answer: Last week, I wrote about a clear shift in Arlington’s (and DC’s) condo market as historically high volumes of inventory have come to market and demand has tapered off. I received some follow-up questions about how the single-family market compares so this week we’ll take a look at some of the trends in single-family detached (SFD) homes in DC, Arlington, Fairfax County, and Loudon County.

Across all markets, demand and competition for SFD homes is high, but there is a clear shift in preferences for SFD housing further away from the city that we’ve never seen before. Both Fairfax County and Loudon County have reached all-time highs in absorption and all-time low months of supply.

Suburban Absorption Rate Sky-Rockets

The absorption rate, a strong metric for demand, has almost always been higher in DC and Arlington than in Fairfax and Loudon Counties. An absorption rate of 1.0 equal one home under contract for every home listed for sale and great than 1.0 means homes are going off the market faster than they’re being put in the market.

The first chart shows a dramatic increase in the absorption rate in Fairfax and Loudon Counties since June, far outpacing the DC and Arlington markets. Loudon County, the furthest/least densely populated of the four markets was on fire in August, with an already high absorption rate increasing nearly 50% over July.

Check out the difference between the Arlington County and Loudon County 10-year Absorption Rate in the second and third charts below.

Listing Volume Up Seasonally

One of the trends that stood out in last week’s condo analysis is the historically high volume of listings that came to market in July and August, ranking among the highest of any month in the last 10+ years. While the volume of SFD listings is up in July and August compared to past summer months, volume is still well below peak spring listing volume.

The year-over-year change in SFD listing volume in Arlington for July and August is pretty extreme (see second chart below) simply because of how low volume was in 2019 due to the Amazon HQ2 announcement, but the numbers still fall well below a normal spring market.

Historically Low Months of Supply in Suburbs

Months of Supply, a great supply/demand metric, is something I watch closely to predict price movement. The lower the Months of Supply, the more upwards pressure there is on prices.

Months of Supply for SFD homes in Fairfax and Loudon Counties has blown through 10+ year historical lows (first and second charts) and shows no sign of slowing down (prices likely rising rapidly), while Months of Supply has tapered off and even increased slightly in Arlington (third chart), a sign that prices might be stabilizing. Months of Supply in Arlington is still way too low to create a buyer’s market where prices might start dropping.

I hope you’ve found this analysis interesting and/or helpful. If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

Arlington’s (Free) Green Home Choice Program

Question: Do you have any recommendations or resources to help us improve our home’s energy efficiency?

Answer: Last year, Arlington released its Community Energy Plan, setting forth the goal of becoming Carbon Neutral by 2050. To support that mission, Arlington offers the Green Home Choice Program (GHC), which is a free program that helps homeowners, builders, and designers create a more energy efficient and environmentally conscious home. I spoke with Helen Reinecke-Wilt, who manages and personally oversees each project, about the program and its benefits.

What You Get?

Helen and her team provide a free consultation/audit and a detailed, customized guide with the materials and construction requirements that will ensure your home is healthier and more efficient. After the work is complete, you are eligible for an official Green Home Certification from Arlington County, which is similar to LEED Certification common in many commercial buildings (offices and apartments).

Who Qualifies?

Small and big budgets alike! The program is available to everybody from homeowners interested in making small, energy-conscious improvements to builders designing a custom home. If you are building a home, it’s a great idea to have your builder work with Helen and her team! The earlier you involve the GHC program, the more they can do for you.

Benefits

  • New homes that are GHC-certified use 42% less energy than non-certified new homes, which equates to a savings of $1600 per year on utilities
  • Renovated homes that are GHC-certified use 55% less energy per square foot with an average utility savings of $600 per year
  • Studies have shown (and here) that 90% of home buyers consider a home’s energy efficiency “very important” in their search criteria and are willing to pay a premium for more efficient homes. The lack of certified green homes means that your new or renovated home will stand out in the market.
  • Healthier air, a more durable home, and lower utilities
  • Eligible for StormwaterWise grant money
  • Satisfaction of knowing that you are contributing positively to a healthier, more sustainable community

Cost

The consultation/audit and guidance come at no cost. Depending on the scope of the project, the upgraded construction materials and methods generally add an extra $10k-$20k to the project, however, in many cases builders or homeowners already plan to use similar materials so the added cost is less.

To receive the official Green Home Choice Certification, there’s a $1,500 fee to test your homes efficiency to make sure it meets the requirements to be certified. In my opinion, builders and homeowners will see a significant ROI on this investment, especially for new homes which currently have an average price of nearly $1.9M. Over 350 homes in Arlington have been certified, but many people use the GHC guidance and choose not to complete the certification.

Helen and her team understand that not everybody has the resources to invest tens of thousands of dollars into a GHC certified home and want to make smaller/cheaper, yet effective improvements to their home’s energy efficiency. She prides herself on being able to make these types of recommendations for homeowners after doing an audit of their existing home so don’t shy away from working with her just because you aren’t building a new house or undergoing major renovations!

Thank you Helen and the Green Home Choice team for your contributions to a cleaner, more sustainable community! If you’re interested in working with their team, you can get started by reaching out to them at energy@arlingtonva.us or 703-228-4792.

If you’d like a question answered in my weekly column or to set-up an in-person meeting to discuss local Real Estate, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at www.EliResidential.com. Call me directly at (703) 539-2529.

Arlington Condo Mid-Year Real Estate Review

Question: How did Arlington’s real estate market perform in the first half of 2020?

Answer: What a wild year it’s been for real estate. After a huge 2019 (SFH/TH review, Condo review), the 2020 market took off in January with prices and competition up sharply. When Coronavirus hit, that momentum tapered off for a couple of months but prices remained steady because of low interest rates and low supply. The Arlington housing supply was down about 400 listings from March-June, but listing activity is surging to historically high levels in July and August, which is traditionally when we see the spring market momentum slow down.

Let’s take a look at how the condo market performed in the first half of 2020 using some awesome charts developed by my new partner, the wonderful Alli Torban. We took a similar look at single-family detached and townhouses last week.

Note that all of the data used in these charts is based on sales that went under contract from January-June in order to provide the most accurate reflection of the market during the first 6 months. I don’t like using the date a home sold/closed for analysis like this because closing date often lags 30-60 days behind agreement of sale (contract). I also removed sales of condos in 900 N Taylor St (The Jefferson), an age-restricted community.

Average and median price continued to rise, but not by nearly as much as last year. The total condos transacted in the first six months of 2020 dropped significantly to 484 from a previous 5-year low of 614, established in 2019.

The Rosslyn-Ballston Corridor, made up of 2201, 22203, and 22209 is by far the busiest condo market in Arlington and 22204 offers the most affordable options, by a significant margin.

The volume of one- and two-bedroom condo sales was nearly equal during the first six months, but I’ve seen a shift over the last few years in buyer demand over the last few years towards two-bedrooms.

Studios/efficiencies (no separate bedroom) are very difficult to come by in Arlington with very few being delivered over the last 20 years. The Eclipse in Crystal City and Trafalgar Flats along Columbia Pike were notable for delivering an unusually high number of studios in the last 20 years.

The demand for larger condos with three-bedrooms has increased significantly over the last 3-5 years as owners of large homes have looked to downsize. However, the market is severely undersupplied with units that meet the needs of these buyers, with just 18 three-bedroom condos selling in the first half of the year.

One of the measures I like taking to gauge market competition is the percentage of condos going under contract within the first week and how much buyers are paying relative to the asking price within that window. An incredible 36% of condo contracts were accepted within the first week this year and the average buyer paid 1.5% more than the asking price to secure a home that just hit the market.

The key takeaways are that good condos sell very quickly and if you love a unit that has just hit the market, be prepared to pay the asking price or more to secure it because if you don’t, there’s a good chance somebody else will.

As the chart above showed, this is a fast-paced market and it got even faster in 2020 with the median days on market for condos remaining at six days and the average dropping to just two weeks.

I took a similar look at single-family detached and townhouses last week. If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

Arlington Single-Family & Townhouse Mid-Year Real Estate Review

Answer: What a wild year it’s been for real estate. After a huge 2019 (SFH/TH review, Condo review), the 2020 market took off in January with prices and competition up sharply. When Coronavirus hit, that momentum tapered off for a couple of months but prices remained steady because of low interest rates and low supply. The Arlington housing supply was down about 400 listings from March-June, but listing activity is surging to historically high levels in July and August, which is traditionally when we see the spring market momentum slow down.

Let’s take a look at how the single-family detached (SFD) and townhouse (TH) market performed in the first half of 2020 using some awesome charts developed by my new partner, the wonderful Alli Torban. We will take a similar look at condos next week.

Note that all of the data used in these charts is based on sales that went under contract from January-June in order to provide the most accurate reflection of the market during the first 6 months. I don’t like using the date a home sold/closed for analysis like this because closing date often lags 30-60 days behind agreement of sale (contract).

Average and median price continued to rise, but not by nearly as much as last year. The total homes transacted in the first six months dropped significantly to 710 from a previous 5-year low of 838, established in 2019.

22207 (most of North Arlington) remains the most expensive place to buy a SFD or TH and 22204 and 22206 (most of South Arlington) remain the most affordable, although we’ve seen strong appreciation in those markets over the last three years.

For new Amazon HQ2 employees hoping to find a SFD or TH to buy within walking distance of your office, your 22202 zip code offers some of the fewest purchase opportunities in the County, so you’ll want to act quickly if you find something you like.

The cost of going from a 4BR homes to a 5BR home is significant in Arlington. This is because most new (read: expensive) homes being built have at least five bedrooms and Arlington’s older housing stock mostly floats between two and four bedrooms. Finding a house with five or more bedrooms under $1M in Arlington is a difficult task.

One of the measures I like taking to gauge market competition is the percentage of homes going under contract within the first week and how much buyers are paying relative to the asking price within that window. An incredible 41% of SFD/TH contracts were accepted within the first week this year and the average buyer paid 2% more than the asking price to secure a home that just hit the market.

The key takeaways are that good homes sell very quickly and if you love a house that has just hit the market, be prepared to pay the asking price or more to secure it because if you don’t, there’s a good chance somebody else will.

As the chart above showed, this is a fast-paced market and it got even faster in 2020 with the median days on market for SFD/TH remaining at seven days and the average dropping below three weeks.

Next week I will have condo data for you. If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.

Real Estate Customs & Contracts Vary Significantly by Market

Question: Is it normal for sellers to leave appliances behind for the next owner?

Answer: A friend of mine is moving in Southern California and mentioned having to move his refrigerator to the new house, which I found odd, but apparently, it’s common in California and other parts of the country. My theory is that one day somebody decided to take their coveted refrigerator with them and it created a chain reaction of everybody having to take their appliances with them after that!

Over the years, I’ve picked up on customs and contract terms that differ significantly here from other markets. I thought I’d come up with a list of standard customs and contract terms in Northern VA that often come as a surprise to buyers and homeowners who have transacted in other markets.

I’d love to hear from readers in the comments about other local practices that surprised you if you were used to real estate customs and contracts in another market.

  1. Appliances Convey: All of the appliances, including washer/dryer, have conveyed (transferred to the next owner) in every transaction I’ve been part of. Buyers and sellers have to agree during negotiations what appliances and other items do or do not convey.
  2. No Individual Attorneys: It’s rare for an attorney outside of the Title Company to be involved in a transaction. The same Title Company almost always works on behalf of both parties (without bias).
  3. (Lack of) Seller Disclosures: Virginia is one of the few “Buyer Beware” (Caveat Emptor) states in the country; which essentially means that sellers in Virginia do not have to disclose any property defects, but they can’t hide them or lie about them either. For homes built before 1978, there’s a one-page lead disclosure form for a seller to note if they’re aware of the existence of lead paint on the property. Most states, including DC and MD, have lengthy seller-disclosure forms.
  4. Dual Agency Allowed, Not Common: Dual Agency, as defined in Virginia, is when one agent represents the buyer and seller on the same transaction. While allowed, if both parties sign-off, it is pretty uncommon.
  5. No Response/Counter Deadline: The contract does not require either party to respond to an offer or counter within a certain period of time unless one party writes in their own deadline
  6. Earnest Money Deposits/Escrows: It is customary for the deposit (EMD/Escrow) buyers make to secure the contract to be due within 3-5 days of ratification (terms accepted by both parties) and the deposit is usually 1-5% of the purchase price
  7. Days: Contractual obligations are usually measured in days from ratification. A “day” in Northern VA contracts is any calendar day, no skipping weekends or holidays, and ends at 9PM.

What’s the takeaway here? Even if you have real estate experience in other markets or past experience in our local market, it’s always good to refresh yourself on local customs and contracts.

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

Buying or Selling a House with a Pool

Question: We have made a backyard pool a higher priority on our housing criteria, but finding very few homes for sale that have one. How difficult is it going to be to find a house with a pool already built?

Answer: A few years ago I wrote a column about whether or not having a pool helps or hurts when selling your home. The short version is that, historically, homes with pools take longer to sell and sell at a deeper discount from the original asking price than homes without pools.

It makes sense because most local buyers don’t value having an in-ground pool – they’re costly to maintain, parents of young children see them as a safety hazard, they often take up most/all of the backyard lawn space, and it’s useful less than half of the year.

However, things have changed this year with buyer and homeowner demand for backyard pools increasing. Let’s take a look at some of the numbers behind finding and selling homes with pools in Arlington and Fairfax County. The data below is based on sales of single-family detached (SFD) homes sold since 2015.

Data Highlights
  • It is REALLY hard to find a home in Arlington with a pool. Only 1.4% of SFD sales in 5+ years have included a pool.
  • The average price of a home with a pool in Arlington is artificially inflated by a $45M sale earlier this year. Without that sale, the average price of a home with a pool in Arlington drops to $1,352,000 and $1,423,000 in the 22207 zip code.
  • 70% of homes sold with a pool are in 22207 and 22205
  • The highest percentage of homes sold with a pool in the area is in Great Falls, with just over ¼ of the sales including a pool
  • In Arlington, you’re most likely to find that pools take up most/all of the usable backyard space, but lot sizes in Fairfax County are big enough to accommodate a pool and a lawn
LocationTotal Sales (since 2015)Avg Sold PriceAvg Lot SizeAvg House SqftAvg Sold $ to Original Ask $Avg Days on Market
Arlington County83 (1.4%)$1,825,9630.354,27197.2%58
2220746$2,376,2100.454,65597.1%64
2220512$1,423,8450.313,98998.8%34
Fairfax County2,571 (5.9%)$1,139,9981.364,58795.7%58
Alexandria (not city)309$730,0480.442,99396.8%44
Annandale75$719,3200.553,19697.2%33
Centreville73$778,0601.404,33597.5%45
Chantilly40$685,7210.323,49898.1%34
Clifton113$1,061,8814.315,76293.5%96
Fairfax Station153$971,8774.075,07095.7%54
Great Falls345 (25.3%)$1,480,8292.356,04993.9%81
Herndon152$715,3520.533,37998.1%30
Mclean373$2,258,2931.146,31492.9%94
Oakton123$1,191,3011.305,31394.1%64
Reston55$848,9440.634,27696.3%39
Vienna240$1,043,7590.994,46895.8%48
Building Your Own Pool

Most people are shocked when they find out what it costs to build a gunite (concrete) in-ground pool around here, which usually runs $150k-$200k+ before additional patio and landscaping work.

I linked up with local Arlington landscape designer/expert Rob Groff, of Groff Landscape Design, to find out why it’s so much more expensive to build a pool here than elsewhere in the region/country and ask about a common strategy I’ve heard from homeowners to hire an out-of-town company to build a pool for less and pay for their travel/lodging during the project to save some money.

Q: Why is it so expensive to build a pool here?

A: It’s so much more expensive to build a pool here because permitting is more time consuming and expensive, materials and labor are more expensive, average lot size is smaller which oftentimes causes for problems, engineering, municipal related site preparation such as construction entrances, super silt fence, site restoration, drainage, etc are all a factor.

Q: Is it more cost effective for homeowners to hire an out-of-town pool company who builds pools for less money and pay for their travel/lodging?

A: A lot of pool companies don’t include all expenses up front and therefore there are a ton of surprise costs on the back-end of the pool project.  I’ve seen this a lot especially from out of area pool companies.  We actually setup a spreadsheet and accompany some of our clients in the vetting process.  We had a local company at 205k for a pool that a Fredericksburg based company had at 145k.  By the time the meeting was over and we corrected the Fredericksburg company to make sure they didn’t leave anything off, they were up at 215k. 

Q: Are there more affordable options for in-ground pools that you recommend?

A: In Northern Virginia, a gunite (concrete) pool has been the standard for a long time.  On average, we see these coming in at $150k-$200k in Northern Virginia (not including the pool patio and other surrounding elements like landscaping, lighting, etc).  Fiberglass pools are growing in popularity and their base price is closer to $55k-$65k (River Pools and Spa). These fiberglass pools don’t feel the same to many homeowners as a true gunite pool, but they save enough money to make people consider them. There are a ton of good videos on their website that explains the differences between gunite and fiberglass, etc.

Thank you very much Rob! For anybody interested in excellent landscaping design consultation and work, I highly recommend Rob and his team at Groff Landscape Design. Pool design, layout, and project management is part of their service package for those interested in building a pool. They even have a great financing program available to help spread the cost of what is often $100k+ landscaping projects.

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

The Return of Arlington’s Housing Supply

Question: Will housing inventory come back to the market after this spring’s big drop?

Answer: If you’re tired of seeing me write about the low housing supply, I don’t blame you, but it’s the most important factor in our housing market and will likely continue to be for the foreseeable future. This week’s analysis digs into just how big the gap in expected vs actual housing inventory was this spring (Coronavirus) and what the future might look like as that inventory (hopefully) rolls back into the market.

20 Years of (mostly) Consistent Housing Inventory

The pace and distribution of new inventory in Arlington has been pretty consistent over the last 20 years. Inventory peaks in the spring, with about 1/3 of new listings hitting the market from March-May and then steadily declines to annual lows during the holidays, with a slight “fall bump.”

Where It All Went Wrong

Like everything else in 2020, housing inventory suffered tremendously during the COVID-19 outbreak and associated lockdowns. In the months prior to COVID-19 (December-February) the number of new listings seemed to be on track to return to, or close to, our 20-year average after a down year in 2019 (due to the Amazon HQ2 announcement). However, from March-June 2020 we ended up down 232 single-family/townhouse listings and 163 condo listings compared to the 20-year average.

My Hypothesis: Hope is on the Horizon

As shown in the first charts, there is a downward trajectory in new listings after new inventory peaks in April and May. We’re seeing drastically different market behavior this year, with a sharp positive trajectory in new listings in June (continuing in July, but not charted due to incomplete data at time of publishing).

My hypothesis is that the majority of homeowners who planned to sell this spring and held off due to Coronavirus still have every intention of selling and will likely do so between this summer and spring 2021, resulting in an above-average rate of new listings per month over the next 9 months, barring any major shifts in Coronavirus related market behavior.

I also think that more of the pent-up inventory will be released this summer/early fall because of how strong the market currently is (low interest rates, high demand) and homeowners who were prepared/preparing to sell this spring won’t want to risk the uncertainty of how Coronavirus and the election might change the market 3+ months from now.

The charts below illustrate what new listing volume might look like if half of the homes that were held back from the spring market are released onto the market from July-September and the other half is distributed in-line with the historical monthly distribution through spring 2021.

The Effect of More Inventory

At the end of the day, what everybody wants to know is how changes in market conditions will affect housing prices and buyers’/sellers’ experience in the marketplace.

Right now, prices are appreciating quickly across many sub-markets. An interesting pattern I’ve noticed over the last ~6 weeks is that there seems to be strong market support for modest price appreciation (1-3% over previous market value), but a thin layer of desperate buyers willing to pay significantly more to lock-in a home purchase.

I’ve seen this pattern show up in Arlington in about a dozen multiple offer situations where most offers center around a similar price range (modest appreciation) and one buyer blows everybody out of the water with an escalation that essentially cannot be beaten (with all contingencies waived). I recently had a listing agent inform me that the winning offer included an escalation that “pretty much didn’t end” on a single-family home listed for around $900,000.

This is great for homeowners on the receiving end of this market behavior, but incredibly frustrating for buyers. I think that one benefit of a spike in summer/early fall listings will be the satisfaction of this presumably thin layer of desperate buyers and prices will become more predictable.

Looking further down the road at the end of 2020 and into 2021, the key metric that will determine how prices react is the absorption rate – the rate of homes sold vs the number of homes being listed for sale. A rate above 1.0 means that demand is outpacing new inventory and there is significant upward pressure on prices. Economists look for an absorption rate of ~0.2 for a balanced market, and the higher the rate, the more favorable the market is for sellers.

Below is the monthly absorption rate for single-family detached homes (red) and condos (yellow) in Arlington and the DC Metro. Note that Arlington’s detached absorption rate is a bit higher if you remove new construction (unfortunately I can’t customize it in this case) and that the Northern VA market is very similar to the DC Metro market.

I expect the absorption rate and demand to remain strong through an increase in new listings which will likely mean continued support for the price growth we’ve experienced so far in 2020.

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