How Many Homes Sell Off-Market or Pre-Market in Arlington?

Question: A friend of mine found a house off-market through their neighbor. Do you have any data that shows how many homes get sold before every hitting the market?

Answer: Most people assume that there are a lot more pre-market and off-market home sales than there really are. The data I used to determine likely pre/off-market activity suggests that only about 4-5% of Arlington homes sell without being listed first.

However, within that 4-5%, you have a wide range of circumstances that cause homes to be sold pre/off-market that aren’t really part of the “standard” sale process including tenants buying from their landlords, investor deals, custom homes, new construction condos, deals between neighbors/family/friends, and others. In this case, I’m loosely defining the “standard” sale process as a homeowner who begins the process of preparing their home for sale with the intention of offering it to the public.

So, the actual percentage of “standard” sales that follow a more traditional sales process that end up selling pre/off-market is likely much lower, and probably closer to 1-3% of total sales.

To come up with my pre/off-market estimates, I looked at the number of sold (Arlington) homes in the MLS that had zero days on market and the number of homes with zero and one days on market. A home with zero days on market was almost certainly sold pre/off-market and a portion of homes with one day on market were sold pre/off-market, but it’s impossible to tell from the data how many of those were pre-market vs how many were listed and the seller accepted an offer on the first day.

Not every pre/off-market sale gets entered into the MLS so those sales won’t show up anywhere in my data, however, I think this dataset gets us pretty close.

The chart below shows the percentage of homes each year that sold with zero or zero/one days on market.

Changes in Pre/Off-Market Rules

You’ll notice from the chart that there was a steady rise in pre/off-market deals through 2019, followed by a quick reduction in those deals since 2020.

For years prior to 2020, in order to gain a competitive advantage, agents and brokerages were creating their own “shadow” pre/off-market listing platforms/feeds that circumvented the cooperative agreements established through the MLS.

In the fall of 2019, Bright MLS (our regional MLS) announced major changes to protect the cooperation agreements of the MLS and required a home to be entered into the MLS within one business of any public marketing or advertising (For Sale sign, social media, email blasts, mailers, website, etc). Since this announcement, the number of pre/off-market deals have dropped substantially, for the betterment of both buyers and sellers, in my opinion.

I wrote about these rule changes in more detail and explained the MLS/Bright MLS concepts further in this October 2019 column.

The Cost of Land in Arlington

Question: Can you do an update of your 2017 article on the cost of land in Arlington?

Answer: In 2017 I took a look at a dataset focused on the cost of land in Arlington and lot sizes, so let’s take a look at these numbers a few years later and see just how much more expensive it is to snag a square of grass here.

Since 2017, the average lot size on all single-family homes (SFH) sold is 8,515 SqFt or about .2 acres and only five of the 4,428 SFH sold had 1+ acres, with none over 1.15 acres. Just 1.6% of sales were homes with ½ acre or more. 82.4% of SFH sold since 2017 sat on 1/10th – 1/4th acre (1/4 acre is about 11,000SqFt).

The chart below breaks down the average lot size and standard deviation of lot sizes by Arlington zip code based on sales of SFH since 2017. I also added two columns looking at the average cost of a new SFH in each zip code based on 2020-2021 sales. 22206 and 22209 didn’t have enough SFH sales to provide good data.

It’s not easy to determine the average cost of homes that get torn down or have a major remodel, so I used the same methodology as I did in 2017 and looked at the cheapest 15% of sales in each zip, by year, and assumed that these represent sales that were completely or mostly valued for the land. The chart below shows the average cost of the cheapest 15% of SFH sold in each zip, by year. The second chart is the same dataset but looks at the cost per SqFt of the lot.

The biggest downside of this methodology is that it’s not capturing sales of the best lots in certain zip codes, but I think this approach does a pretty good job of capturing average values for most sales where the lot was the entire or majority of the value.

Lots in 22201 are by far the most expensive per SqFt because they’re both expensive (highest average price for cheapest 15%) and small (third smallest average lot size by zip code, the two with smaller lots barely have any SFH lots).

While you’ll pay about $100k more for the average lot in 22207 compared to 22205, you’re most likely getting a larger lot so the cost per SqFt of those lots ends up being similar. The cheapest lots are in 22204 (by nearly $150,000), but the best value, by far, is 22213 with the average lot just $67/SqFt.

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

Condo Market Update & Breakdown

Question: How has the market for high-rise condo buildings compared to low-rise/smaller condo communities through the pandemic?

Answer: The condo market began to turn last summer and got progressively worse through November/December, but has improved slightly and stabilized a bit since December. The next few months will give us a lot of good information on whether the condo market will improve or if we can expect a rebalancing as buyer priorities shift more permanently due to their COVID experiences and new telework policies.

This week I took a look at some of the underlying condo market data to see if there has been a noticeable difference in how garden/townhouse-style (garden-style = low-rises of 1-4 stories) condo communities have performed compared to mid/high-rise buildings. I also broke down the condo market by bedroom to see if one-bedrooms have been impacted more than larger two and three bedrooms units.

Arlington/DC Metro Condo Market Overview

First, let’s take a zoomed-out look at the Arlington and DC Metro markets. We are still experiencing a rush out of condos (see first chart, New Listings), with the DC Metro and Arlington both recording record-highs in total condos listed for sale in January and February. The reasons for this range from people seeking more space/yard to investors unable to find tenants.

Months of Supply (measure of supply and demand) shown in the second chart shows us that Arlington experiences a slightly worse (for sellers) condo market than the DC Metro overall after experiencing a much stronger market from late 2018-early 2020 in the wake of Amazon’s HQ2 announcement. Both markets have shown signs of stabilizing over the last few months, after getting progressively worse each month in the 2nd half of 2020.

Garden/Townhouse-Style vs Mid/High-Rise

The overall Arlington condo market is sitting at about 2.25 Months of Supply, still well below the 6 Months of Supply deemed by economists to be a balanced market for buyers and sellers. As of this writing, the mid/high-rise market has about 2.6 Months of Supply and the garden/townhouse-style condo market is sitting at 1.3 Months of Supply, making it a pretty good market to sell into.

Historically, the garden/townhouse-style market has performed better (faster sales, more competition/seller leverage) than the mid/high-rise market so the difference in Months of Supply doesn’t indicate a COVID-related shift. As you’ll see in the table below, the differences between the garden/townhouse-style condo market and the mid/high-rise market have remained relatively similar each year from pre-Amazon (2018) through the Amazon surge (2019) and now into the COVID-related pullback (2020).

Contract Year/ TypeAvg Sold to Original AskAvg Days on Market% Sold in 1-10 Days
2018
Garden/Townhouse-Style98.4%2746%
Mid/High Rise97.5%4534%
2019
Garden/Townhouse-Style100.8%1373%
Mid/High Rise99.3%2359%
2020
Garden/Townhouse-Style99.7%1465%
Mid/High Rise98.4%2947%
2021
Garden/Townhouse-Style98.7%3648%
Mid/High Rise97.7%4336%

Condo Market Performance by Bedroom Count

I also took a similar look at the Arlington condo market by bedroom count. Months of Supply for one-bedrooms is highest at 2.5, followed by two-bedrooms at 1.8, and then three-bedrooms at 1.7. The early data for 2021 suggests that one-bedroom condos will suffer more in the market than larger two and three bedroom units, which makes sense from a COVID standpoint because most one-bedroom units don’t have a good dedicated office space.

Contract Year/ Bedroom CountAvg Sold to Original AskAvg Days on Market% Sold in 1-10 Days
2018
197.7%3637%
298.4%3641%
397.5%3247%
2019
1100.2%1765%
2100.3%1767%
398.1%3555%
2020
199.0%2157%
299.2%2256%
398.8%2459%
2021
197.5%4832%
298.4%3547%
399.9%3256%

I do expect the condo market to improve over the next few months as more people are vaccinated and warmer weather allows people to return to some semblance of a normal life, and thus buying behavior that is more reflective of pre-COVID times. However, I think that how employers choose to handle telework long-term will ultimately determine whether we will experience a full return to the pre-COVID market or if we are going to see a more permanent rebalancing of condo values as commutes/convenience become less of a priority for buyers if they are no longer coming into an office every week.

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

Condo Smoking Bill Passes in Virginia

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

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

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

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

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

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

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

State of the Arlington and Northern VA Housing Market

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

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

Single-Family and Townhouse Prices Up

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

Condo Market Better, Slow Improvement Expected

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

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

Arlington Months of Supply

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

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

New Listing Volume in Arlington

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

Dramatic Shift in Fairfax and Loudoun

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

Northern VA Condo Supply

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

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

COVID Impact on Arlington’s Rental Market

Question: How has COVID impacted Arlington’s rental market?

Answer: Recent articles have shed light onto just how much COVID has hurt the apartment rental market in the DC Metro, including this article on rents dropping by 14% in Arlington and this article on rents in DC’s Class-A high-rise buildings dropping ~18%.

I have certainly experienced the difficult rental market in the last 10 months with clients who have struggled to find new tenants for their condos for months, even after significant price reductions. In some buildings, there are double-digit numbers of condos being offered for rent, with little interest.

I have also spoken to many condo owners who are turning to selling units after months of vacancy trying to rent them out, which is one of the reasons for last year’s explosion in condos listed for sale.

I took a look at last year’s rental market for apartments, townhouses, and single-family homes and compared it the previous four years to see how each sub-market performed. There’s a summary of key findings below and a detailed data table to follow.

Note that this only includes properties in Arlington that were rented through Bright MLS. Most commercial rental buildings do not use the MLS and not every homeowner with an investment property rents through the MLS, but the number of properties rented through the MLS is enough to make this statistically reliable data.

Key Findings

  • Condo rentals dropped in price for studios (-10.2%), one-bedrooms (-4%), and two-bedrooms (-1%). If you remove January and February (pre-COVID) listings, the price drops increase further. I suspect 2021 will see an even larger drop in rental prices because many owners are still trying to find a tenant.
  • The average time to rent a unit increased by 50% to two months and tenants negotiated significantly further below the asking price than ever before.
  • Two-bedroom units struggled, but not nearly as much as studios and one-bedrooms units, likely because the 2nd bedroom provides a much-needed home office.
  • COVID had the opposite effect on single-family and townhouse rentals with prices increasing to all-time highs, homes renting faster than ever before, and owners securing prices closer to their asking price than ever before.
  • Rentals of small two-and-three-bedroom houses and large four-bedroom townhouses were in the most demand, with average days on market just 3.5 weeks and some of the highest rental price to asking price ratios of any property type.
  • I expect single-family and townhouse rentals to have an even better 2021 (from the perspective of the homeowner) as people continue trying to get more space, avoid common living, and find buying those homes to be cost-prohibitive and/or too difficult (competitive).
Year ListedAvg RentAvg $/sqftAvg Rent $ to Ask $Avg Days on Market# Listed
Condo/Apartment
Studio
2016$1,409$3.0998.2%42113
2017$1,406$3.0298.7%45129
2018$1,434$3.2398.6%37123
2019$1,462$3.2598.5%31114
2020$1,313$3.0593.1%57146
One Bedroom
2016$1,783$2.3997.4%49553
2017$1,750$2.4497.5%58577
2018$1,886$2.5798.4%50572
2019$1,871$2.6398.1%36684
2020$1,797$2.4895.7%53579
Two Bedrooms
2016$2,519$2.2897.5%59494
2017$2,505$2.2897.3%63489
2018$2,605$2.3497.6%58471
2019$2,604$2.3797.8%46520
2020$2,576$2.3596.3%56469
Detached
Two Bedrooms
2016$2,339$1.9696.6%5658
2017$2,387$2.0097.0%4838
2018$2,435$2.0298.6%4054
2019$2,444$2.1896.8%4846
2020$2,456$2.1798.4%2759
Three Bedrooms
2016$3,030$1.7797.1%51177
2017$3,061$1.6997.5%51188
2018$3,108$1.8297.9%46172
2019$3,152$2.0797.1%35204
2020$3,299$2.1198.8%26182
Four Bedrooms
2016$3,518$1.5196.5%53128
2017$3,658$1.6297.9%46161
2018$3,665$1.7498.6%39149
2019$3,788$1.9296.9%41181
2020$3,883$1.9798.4%35155
Five Bedrooms
2016$4,528$1.2398.4%5645
2017$4,517$1.4598.1%4861
2018$4,553$1.5798.6%4153
2019$4,808$1.7697.2%4065
2020$4,873$1.7998.5%3563
Townhouse/Duplex
Two Bedrooms
2016$2,292$1.7697.7%58170
2017$2,342$1.7797.8%48163
2018$2,364$1.8998.3%39172
2019$2,390$2.0298.1%39213
2020$2,470$2.0898.2%29214
Three Bedrooms
2016$3,393$1.7997.4%60124
2017$3,395$1.8297.7%51156
2018$3,295$1.9198.5%43173
2019$3,378$2.0597.4%37173
2020$3,441$2.0697.1%34189
Four Bedrooms
2016$3,890$1.5698.3%4433
2017$4,051$1.7595.9%6530
2018$4,157$1.6898.6%5137
2019$4,090$1.9699.1%2739
2020$4,110$1.7199.1%2636

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

Market Values 18.2% Higher Than County Assessments

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

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

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

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

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

Let’s take a look at the data!

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

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

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

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

Analyzing the Pace of Housing Inventory and Demand

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

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

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

Weekly Pace of Listings, by Housing Type

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

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

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

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

Weekly Pace of Listings, by Year

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

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

Weekly Pace of Listings and Contracts

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

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

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

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

Deep Dive into Arlington’s Townhouse Market

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

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

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

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

Explanation of Data

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

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

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

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

5-Year Townhouse Market Performance

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

Here are a few highlights from the data below:

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

What to Expect from Townhouse/Duplex Inventory

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

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

Sales Since 2019, by Decade Built

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

Below are a few highlights from the data:

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

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

Visualizing Arlington’s Explosion in Homes Listed for Sale

Question: Did the volume of homes listed for sale recover after a slow spring/summer?

Answer: There has been a surge of new inventory coming to market since July. For condos, it has been historically high, by a wide margin, resulting in a 20% increase in 2020 over the 20-year average. While the single-family and townhouse listing volume has spiked since July too, overall, we’re just .5% above our 20-year average.

In July I wrote a column with charts showing how low Arlington’s listing volume was compared to the 20-year average and I made some predictions that the inventory we lost in the spring/early summer would return in the late summer/fall. This week we’ll take a look at how those predictions played out and dig further into listing volume over the last four months and overall in 2020.

Inventory Comes Back, And More

Historically, March-June bring about the highest listing volume, but this year, due to COVID-19, many homeowners held off on putting their home on the market. In July, I predicted that a lot of the “missing” inventory from March-June would be listed from July-October, which would result in a delayed spring market.

As it turned out, the number of condos listed from July-October FAR exceeded the amount of “missing” inventory from March-June, by nearly 3x! For single-family homes and townhouses, July-October listing volume also exceeded the amount of “missing” inventory from March-June, but by a much smaller margin.

In the chart below, missing and excess inventory is calculated off of the 20-year average for monthly listing volume.

Condo Volume at Historical Levels, By a LOT

Just how extreme have the last four months of listing volume been in the condo market? There were 801 condos listed for sale from July-October. Prior to that, the highest four-month listing volume was 650 units from April-July 2004.

Segmenting Listing Volume by Zip Code and Bedroom Count

Overall, the 2020 single-family home and townhouse listing volume is up just .5% over the 20-year average through October and the 2020 condo listing volume is up 20% over the 20-year average through October.

Below are charts breaking down how changes in listing volume have been distributed by zip code and bedroom count. My theory, prior to charting the data, was that there would be a bigger increase in listing volume for smaller properties (1BR over 2BR condos, 2-3BR over 4BR-6BR single-family/townhouses), but it turned out to be the opposite. Go figure!

Current Supply Levels

The market has been able to absorb the extra single-family and townhouse inventory, despite it coming during a time of year with historically lower demand. However, the market hasn’t come close to absorbing the condo inventory, which continues to build at a rapid rate.

See the below chart of changes to Months of Supply (measure of supply and demand, higher MoS favors buyers) over the last three years between single-family homes and condos.

The result is that the single-family and townhouse market remains competitive, with prices remaining stable through the fall and winter, while the condo market shifts to a more favorable market for buyers, creating substantial downward pressure on condo prices.

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