Early Real Estate Market Conditions Are…

Question: How is the market shaping up for 2020? Have things cooled down or picked up where they left off last year?

Answer: The early Arlington/Northern VA market conditions are…crazy. After a fast and furious 2019 for condos and detached/townhouse properties in Arlington, it looks like we’re in for another year of fast-paced sales and strong appreciation.

In some of the most in-demand markets (e.g. R-B Corridor condos and $800k-$1.2M detached) pre-inspections (buyers do an inspection before making an offer), zero contingencies, and escalations 3-10% over the asking price no longer guarantee an accepted offer because there are multiple buyers offering those terms.

From the activity I’ve seen on both the buyer and seller side of this market, it seems like sellers can safely increase their asking price by 3-5% over what 2019 sales support and soon enough appraisers will have the necessary data points to support these increases, thereby eliminating much of the current appraisal risk for financed purchases.

Activity Over The Last 30 Days

The market fired up within the first couple weeks of January, but you know I never like to make statements about the market without also backing it up with data. So here are some highlights on the type of activity we’ve had over the last ~30 days (excluding relisted homes, Coops, and age-restricted housing). The data is of 7AM Tuesday February 18:

  • 223 homes listed for sale
  • Of those 223 homes, 150 (67.3%) are sold or under contract
  • Of the 150 homes sold or under contract, only 16 (10.7%) were on the market for 10+ days and 97 (64.7%) were on the market for 6 days or less (indicative of multiple offers)
  • Of the 73 homes still for sale, 37 (50.7%) are still within their first week on the market (high probability of going under contract soon) and 16 (21.9%) are $1.7M+
  • Of the 25 that sold, only one sold for below the original asking price and it was in a condo building with a major pending lawsuit that makes it nearly impossible for a buyer to get a loan. 7 have sold for over ask.
New Supply Increasing, Total Supply Decreasing Less

There is a glimmer of hope for buyers amongst all the competition and price appreciation. Arlington had a YoY increase in new listings for December ’19 and January ‘20 for the first time since October ‘18 (Amazon HQ2 announced in November ‘18). While demand is still outpacing new supply, resulting in 45(!) consecutive months of YoY decreases in housing supply, the drop in YoY supply was below 20% for the first time since October ’18 (-8.8% drop). So what does that mean in plain English? It’s getting less bad.

Where Do We Go From Here?

Here are some of my thoughts about what the rest of the spring/2020 might look like:

  • Once more of the early sales close, asking prices should adjust upwards to reflect the current market so we won’t see the same volume of offers but I expect prices to maintain the recent increases and buyers will continue offering very attractive terms to sellers (little or no contingencies, quick closes, etc).
  • In many cases there are 5-10 losing offers for every sale so those buyers are still active and possibly even more motivated, hence why I don’t see the market slipping in a couple of months after an early surge
  • I think there’s a good chance that we continue to see YoY increases in the number of new listings as homeowners decide to take advantage of the price increases over the last 18 months to move up, downsize, or relocate to a less expensive market
  • Low interest rates, strong stock market/economic performance, and the long-term local growth potential from Amazon, Nestle, and others will keep demand high
  • I’m interested to see how the elections impact market conditions this year. Usually buyers freeze up and sellers hold back on listings in the months leading up to a national election. I wouldn’t be surprised to see demand dip this fall given how much negativity will surround this year’s campaigns. However, with so much momentum in the market and if supply also drops, I’m not confident that it will result in buyers paying less.

For those of you currently looking or planning to look outside of the Arlington/Alexandria markets hoping for an easier buying experience, I’m sorry to say that homes are moving quickly with multiple offers and favorable contingency terms (for sellers) all over Northern VA. Expect this level of activity/competition to last through May/June.

If you’d like to discuss the best buying or selling strategies in the current market, feel free to email me at Eli@EliResidential.com to schedule time to talk.

Resale Value of New Construction

Question: We bought a new home in Arlington five years ago and are considering selling, but we’re concerned about the resale value of new homes given the amount of newer homes being built in the market. Do you have any data on how new homes do when they resell for the first time?

Answer: The new/newer construction market is the only Arlington sub-market that is anywhere close to properly supplied, with almost 4.5 months of inventory available (number of homes for sale divided by average sales per month = months of inventory).

Most housing economists say that a market is at balance for buyers and sellers when there is six months of inventory. For comparison, sub-markets like one-and-two-bedroom condos, <$1M detached homes, and townhouses each have between one and three weeks of supply.

New Homes Are Appreciating…

There’s a logical case to be made that when a new home (built within the last decade) gets resold, it will struggle to compete with other brand-new homes given how similar these homes have been over the last ten years, combined with the amount of supply in the market. Fortunately for owners of recently built homes who may sell in the near future, that logic does not prevail and new homes are being sold for more the second time around.

…But Just A Little

There aren’t a ton of data points yet (most people buying expensive new construction will be there for a long time), but just enough that I think we can start to get a good idea of how new homes (that aren’t new anymore) from the past decade perform when they’re resold into a market with many similar new homes.

To study this, I identified homes built since 2012 that have since resold, excluding homes that sold within one year of their original purchase or any homes with major improvements since the original purchase or clearly left in disrepair. Here’s a summary of my findings:

  • 53 homes met the criteria, nearly all in North Arlington
  • Average appreciation on resale was 6.7%
  • Average annualized appreciation was 2.1%
  • Only seven homes sold for less than they were bought
  • Sixteen homes sold for at least 10% above what they were bought
  • On average, it took 64 days for these homes to go under contract, about 30% longer than the entire detached home market during that same period
Cause For Concern?

For those who own a new(er) home, you may be underwhelmed by these numbers relative to what the rest of the market is doing — compared to other detached homes in the Arlington market, new homes are appreciating at a noticeably slower rate.

Part of that is due to the fact that there’s a much higher supply of similar new/newer homes for sale so that will naturally keep prices more stable. Another reason is that it takes longer for the upper end of the market to appreciate, so the growth we’ve seen <$1.25M hasn’t impacted the $1.5M+ market as much.

So is a new home a bad investment because it appreciates less than other homes? Not at all.

First, one of the reasons buyers pay a premium for new/newer homes is because your maintenance and repair costs should be significantly lower for the first 10-15 years. Investment value isn’t only about what you buy and sell for, it’s also about how much you spend between the two transactions keeping the house operating (often more valuable than appreciation).

Second, for most families, a new/newer home offers square footage and a floor plan they can’t find anywhere else so the non-financial/quantifiable benefits are significant. Opportunities to customize to taste also factor into the non-financial/quantifiable return that owners may receive.

The new construction market operates differently from the rest of the housing market. If you have any questions, don’t hesitate to reach out to me at Eli@EliResidential.com. And a quick plug for two custom homes on ¼ acre lots I’m selling in Bellevue Forest, being built by James McMullin, Arlingtonian and third-generation Arlington developer/builder. Demolition and excavation will start in the next month!

2019 Arlington Real Estate Market Review: Detached/Townhouse

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

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

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

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

Arlington Detached/Townhouse Market Performance

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

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

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

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

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

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

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

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

Looking Ahead

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

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

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

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

2019 Arlington Real Estate Market Review: Condos

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

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

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

This week I will dig into how Arlington’s condo market performed in 2019 and next week I’ll do the same for the detached single-family home and townhouse market. I did separate write-ups on the 22202 (Amazon zip code) condo and detached home markets last month.

Arlington Condo Market Performance

First we’ll take a look at some of the key measures for market performance across Arlington and within North and South Arlington. This data excludes age-restricted housing (The Jefferson), Cooperatives (River Place), and townhouse-style condos (Fairlington).

  • The condo market seems to have appreciated 7-8% in 2019, after experiencing barely any growth from 2013-2017 and modest growth in 2018
  • South Arlington beat out North Arlington in every key category, which makes sense because it’s an easier price point for homeowners and investors who wanted some sort of real estate position in Arlington before Amazon’s hiring picks up
  • The average condo buyer in South Arlington paid .8% over the seller’s asking price
  • Condos in North Arlington sold twice as fast as they did from 2015-2017. In South Arlington they sold more than three times faster than 2015-2016.
Performance of Different Sub-Markets

I took a look at some of the sub-markets that make up large cross-sections of Arlington’s condo market to see how they performed compared to the overall market.

For “standard” 1BR and 2BR condos in the Rosslyn-Ballston (R-B) Corridor I specifically looked at condos in buildings constructed during the 2000s condo boom with 650-800sqft (1BR) and 950-1,200sqft (2BR).

  • “Standard” R-B 1BRs appreciated 4% in 2019
  • “Standard” R-B 2BRs appreciated 5% in 2019

For “older” 1BR and 2BR condos, I looked at those constructed in the 1940s-1960s. This category of condos had been slow to appreciate and as of 2018, a lot of owners were still trying to dig out from 2005-2007 prices.

  • Older 1BRs appreciated 7.4% in 2019
  • Older 2BRs appreciated 10.5% in 2019
Performance Within Different Price Ranges

Appreciation in Arlington’s condo market was pretty evenly distributed between the upper, middle, and lower price ranges as evidenced by the change in the average price of the lower 25%, middle 50%, and upper 25% of sales from 2018 to 2019.

  • The average price of the middle 50% of Arlington is now well north of $400k
  • Over the last two years, Arlington’s least expensive housing has appreciated the fastest, with the average price of the lower 25% increasing by more than 12% since 2017. You can likely attribute this to investor activity.
  • If you’re curious about the max sold price in 2019 of $4,750,000, it was a top floor 4,400+sqft condo at Turnberry Tower (link). It was first offered for sale three years ago for $7M. If you remove this sale from the data, the upper 25% appreciated 7.4% in 2019.
Inventory Shortage

A lot of real estate conversation in 2019 revolved around inventory shortages. The number of condos offered for sale dropped nearly 21% in 2019 and the increased demand (higher absorption rate) pushed available inventory down by more than 57%. The chart below shows the YoY quarterly decrease in new condo listings and available condo inventory in Arlington.

https://cpp1.getsmartcharts.com/chart/mls/1/getreport.php?rid=2,3&ftid=2&fid=1005&gty=4&ltid=4&lid=51013&gid=2&cc=05c500,ffc000&sid=1&mid=2&tt=2&mode=4
Looking Ahead

I will be keeping a close eye on inventory levels as this year starts off. Last year a lot of homeowners decided to withhold homes from the market in anticipation of higher Amazon-related appreciation. Now that much of the market has experienced significant appreciation, it will be interesting to see if more homeowners decide that now is the right time to sell. I expect demand will be able to keep pace with an increase in new inventory, but more inventory should keep prices a bit more level this year.

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

I predict that condo values will grow steadily in the 2-5% range over the next 5-10 years, but that no year in the 2020s will outpace 2019. Some possible exceptions to this are major zoning changes by Arlington to allow for more condo development (increased supply), the conversion of some large apartment buildings into condos (increased supply), or a national economic crisis (decreased demand).

Thanks for reading along! If you have any questions or I can be of any help with your real estate needs, don’t hesitate to reach out to me at Eli@EliResidential.com. Next week we will dig into the detached single-family and townhouse markets!

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.

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

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

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

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

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

Market Make-up

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

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

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

22202 Detached Single-Family Performance

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

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

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

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

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

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

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

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

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

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

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

The Missing Ultra High-End in Arlington

Question: I recently saw a home listed in Arlington for almost $30M. Are there neighborhoods in Arlington with ultra-expensive homes like this?

Answer: We hear a lot about the “missing middle” in Arlington housing, but there’s another market that Arlington struggles to support that nobody is talking about…the super-rich. Sure we have plenty of homes that sell for $1M-$2.5M (457 sold in 2019) but in 2019 there were only seven sales over $2.5M and just one over $3M (and that was a sub-dividable lot). So what gives with everybody calling Arlington “expensive” if we can’t support the super-rich? Where do they live? (I hope my sarcasm is coming across…)

405 Chain Bridge Rd Arlington VA 22207. Listed by Mark Lowham, TTR Sotheby’s.

Arlington’s Most Expensive Homes

The recently listed $28.5M home, by Mark Lowham of TTR Sotheby’s, on the Potomac River side of Chain Bridge Rd is an anomaly in Arlington. Outside of the prestigious Country Club Hills neighborhood and Turnberry Tower penthouse-level condos, sale prices in Arlington rarely eclipse the $3M mark and even in those communities the handful of $3M+ sales historically top out at $4M. And then you have a very small pocket of ultra-luxury homes at $5M+ along the Potomac, off Chain Bridge Rd, which fall within Arlington County, but actually have a Mclean mailing address and zip code (22101).

Note: There are dozens more homes in Arlington worth $3M-$5M that just haven’t been sold. Many are custom built in the last 10-15 years with the original owners still occupying them. There are also a handful of private sales that aren’t entered into the MLS because they were sold off-market.

Why Doesn’t Arlington Have Ultra-Expensive Homes?

So with so much wealth and close proximity to DC, why doesn’t Arlington have more ultra-expensive homes? The answer is lot size.

For anybody that has looked for a home with a little elbow room/privacy in Arlington, you’ve reached the unfortunate conclusion that it’s very difficult to find anything with more than ¾ acres (even ½ acre is highly coveted) and there are just a small handful of properties with more than 1.5 acres. Smaller lots make it difficult to build enough house to justify a $5M+ price tag.

Where To Spend $5M+?

So where do people with $5M+ to spend on a home live? In Northern VA, most of those homes are in Mclean or Great Falls, as well as further west in Loudon County’s horse/wine country. DC’s most popular ultra-expensive neighborhoods are Georgetown and Kalorama, with a spattering of other neighborhoods west of Rock Creek Park. In Maryland you’ll find the most expensive homes in Potomac along River Rd, as well as Chevy Chase and Bethesda.

Enjoy Some Photos

For those of you who are here just for the pictures, here you go! I’ve linked to $5M homes either for sale or sold in the last few years in the area:

Northern Virginia

Washington DC

Maryland (Montgomery County and Eastern Shore)

How Agents and Agent Teams Are Structured

Question: I’m in the process of searching for a real estate agent and having trouble understanding the different organizational structures. Can you explain how it works?

Answer: Most real estate agents operate as independent contractors within their brokerage (office), thus have autonomy to operate their business/service model as they choose. With over 12,000 Realtors in the Northern Virginia Association of Realtors alone, the organizational structures and business models vary widely to suit an agent’s style of business and/or target clientele.

I think it’s almost as important for home buyers and sellers to learn about their prospective agent’s operating model as it is to make sure they know your market. An agent’s operating model will impact your experience and you need to make sure it aligns with your expectations.

I’ll break down some of the organizational structures that are most common today so you have an idea of what to look for.

Brokerage

At the top of the organizational structure is the brokerage, which is best described as the office your agent works for. The brokerage is the legal entity involved in the transaction and when you sign a Buyer Representation or Listing Agreement, it’s actually with the brokerage, with your agent as the assigned representative of the brokerage.

Currently in the DC Metro, most brokerages are made up of multiple agents, often dozens to hundreds, and function like a shared office. An agent cannot operate independently outside of a brokerage, but an individual agent can have their own broker’s license and operate an independent brokerage.

Most agents operate as independent contractors within their brokerage, but there are some models, Redfin being the most popular, where agents are employees.

Agent Models

In most cases agents operate individually or within a team, structured in a some common ways:

  1. Individual Agent, No Support: Many agents work independently without any sort of support staff. The advantage for clients is that you always know who you’ll be working with and who is handling every detail of your transaction. The main disadvantage is that there is a single point of failure if that person is unavailable.
  2. Individual Agent With Administrative Support: Some independent agents hire one or more people to support administrative tasks like scheduling and marketing. Some brokerages also offer this type of administrative support to their agents. This should be an advantage over #1 because the agent has more time for high-value tasks, but it also requires the administrative support to be on top of things and strong communication between agent and admin.
  3. Team Partnership: Two or more experienced agents with strong individual businesses may partner to share some administrative support costs and build a stronger brand together. For the client, it has many of the same qualities as #2, but there’s usually an added benefit of knowing that there’s at least one other experienced agent available as back-up in case your agent in unavailable.
  4. Team Lead With Coordinators: An individual agent or partnership with a large book of business that uses specialized buyer and seller coordinators to support client activities. An advantage to clients is that the transaction is generally led/directed by an experienced agent and that there is no single point of failure, you’re working with a support team. A disadvantage is that some or many high-value pieces of the transaction are handled by coordinators, not the lead (experienced) agent.
  5. Team “CEO” With Junior Agents: An experienced agent who acts more as a CEO, overseeing the operations of a large team of agents, and personally handling very few transactions, if any. Clients should benefit from systems and processes the “CEO” agent used to become successful, imparted on the junior agents. A disadvantage is that these teams often have dozens or more agents and the experience of those agents varies widely and don’t necessarily reflect the talent of the “CEO” agent.
What Should You Ask?

It’s important for you to understand how your real estate agent operates and it shouldn’t be hard to find out by asking some simple questions.

  • Will I work with anybody else during the transaction?
  • Will anybody else work on my transaction?
  • What happens if I need something when you’re unavailable or out-of-town?

I hope this has been helpful for anybody starting out their search for an agent or just generally confused by how the industry is structured. As always, if you would like to meet with me about buying, selling, or renting in Arlington or the surrounding DC Metro communities, feel free to email me at Eli@EliResidential.com.

Expect A Slower Market Until February

Question: Does the Arlington market change in the winter?

Answer: November marks the start of the traditional “winter market” in Arlington that is defined by fewer homes being put up for sale and homes sitting on the market just a bit longer than they did earlier in the year. The decrease in new inventory will be obvious to anybody who has been searching for a home in 2019, but you’ll barely notice the increase in how long homes are taking to sell because the market is moving so quickly that even a slowdown will mimic spring markets in previous years.

Sharp Decrease In New Inventory

Historically, the fewest homes hit the market in Arlington from November-January, with the pace of new listings in December coming in at nearly 1/3 the rate of new listings from March-May. With inventory levels in 2019 already at historical lows, this winter will feel especially short on housing supply.

Month Contribution to Total New Listings
Buyer Demand Cools Off

Historically, the percentage of homes that go under contract within the first ten days decreases from November-January, with November and December (holiday season) having the most noticeable reduction in quick sales. However, with the pace of the Arlington market at all-time highs in 2019, you can expect the drop in demand in November and December to feel like peak spring demand in previous years.

Percentage of Homes Under Contract in First 1-10 Days
Is The Winter The Right Time For You?

The winter can be a great time to buy if you’re more focused on value because demand decreases so you may pick up some negotiation leverage.  However, if you’re searching for something unique and struggling to find properties that fit your criteria, the odds of the perfect place hitting the market in the winter decreases.

Given how low inventory is heading into this winter, I’m not sure buyers will find as many deals as they have in previous years. Demand is still strong from buyers who haven’t found a home yet in 2019 and low supply makes it a strong market for sellers, even during the holidays.

If you’re considering buying or selling in Arlington or the surrounding DC Metro communities and would like to learn more about the impact seasonality will have on your process, feel free to reach out to me at Eli@EliResidential.com.

Making Up For A Questionable Housing Report

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

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

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

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

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

Accurate Headlines From The First Nine Months

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

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

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

Arlington’s Next Luxury Condo Building

Question: Do you think Pierce condos in Rosslyn will be able to sell for the prices they’re advertising?

Answer: A few months ago, local developer Penzance released details on their upcoming Highlands development that includes three luxury residential buildings, one of which will be a 27-story condo building called Pierce.  Here’s a summary of what we know:

  • Large Floor Plans: 104 units ranging from a 1,270sqft 1BR+Den to a 3BR with over 2,400sqft
  • Larger Prices: Starting at $900k and increasing to over $3M
  • Luxury Finishes: Thermador appliances, hardwood throughout, Snaidero cabinets, floor-to-ceiling windows, some direct-access elevators and other luxury touches
  • Top Amenities: 24hr staff, rooftop pool, two-story gym, club room, to name a few

Courtesy of Mayhood at PierceVA.com

Is There Anything Else Like It?

It seems that Penzance is modeling its approach after Turnberry Tower, the iconic all-glass blue building a block from the Rosslyn Metro. Both buildings’ smallest units are 1BR+Den with about 1,300sqft, they have similar high-end finishes, many units with direct-access elevators, and both have luxury amenities.

Demand and prices at Turnberry have increased significantly over the last 18-24 months, which is a good sign for Penzance.

Meeting New Demand

There is a significant, relatively new, demand in Arlington for large condos to satisfy Baby Boomers downsizing from big suburban homes around the DC Metro. Over the last 20 years of condo development in Arlington, most floor plans have been 1BR-2BR, ranging from 700-1,000sqft. To find larger floor plans, buyers are mostly left with buildings constructed in the 70s and 80s, so there is currently an underserved market for newer condos with large floor plans.

For example, 2000 Clarendon, a condo building in Courthouse set to deliver next year, originally planned six 2BR+Den units of ~1,400 and ~1,700sqft. They had so much interest that they added two more. Their current waitlist for the 2BR+Den units has over 20 people on it. However, the price of 2000 Clarendon units are about half what similar units at Pierce will cost.

Will People Pay These Prices?

  • 1BR+Den with 1,270+sqft start at $900k (4 units)
  • 2BR with 1,320+sqft start at $1.1M (44 units)
  • 2BR+Den with 1,953+sqft start at $2M (46 units)
  • 3BR with 2,411sqft start at $2.6M (10 units)
  • More than half of the units will be $2M+
  • More than half of the units will be over $1,000/sqft. Over the last five years, seven Turnberry condos and two Waterview condos have cross the $1,000/sqft mark. DC hits this mark in its premier buildings.

Rosslyn has only begun its transition into a luxury market and Pierce will be a great indicator of where Rosslyn is in the eyes of the market. The sales won’t come overnight, or be without challenges, but the developer can afford to be patient for:

  • The down-sizing Baby Boomers that Pierce is suited for can afford to pay a significant premium for the right floor plan and building
  • Amazon, Nestle, consulting/law firms, Defense contractors, and tech start-ups are supplying more and more highly-paid Executives to the Arlington housing market
  • International money will be drawn to its proximity to DC and Amazon
  • Trophy units with direct views of DC and the Potomac River should be in high demand because it’s unlikely that future developments will block those views, something that has had a major impact on many Turnberry owners in the last five years (I wouldn’t be surprised to see some of them move a couple of blocks up the street to reclaim their views)

There are some challenges that will likely slow the pace of sales and maybe even cause them to bring prices down on some units:

  • At these prices, buyers will also be looking at similar units in DC’s top addresses in neighborhoods like Georgetown, West End, and The Wharf
  • There will be a 7-11, fire station (quiet-exits will help, but won’t convince everybody), and a school (a negative for most, despite the beautiful design) within one block
  • Being up the (steep) hill from many of the neighborhood’s top draws including Rosslyn Metro, Key Bridge, Mt Vernon Trail, and new dining options
  • Rosslyn still has many elements from its sleepy government office district days and probably 5-10 years from shedding that completely via redevelopment that’s in the pipeline

Pre-sales are scheduled to begin in early 2020, but the building probably won’t be finished and ready for move-in until well into 2021. I don’t think the current market, or even the 2020 market, will be ready to pay these prices for most of the 104 units, but I think by 2021 we’ll see Rosslyn far enough along and Arlington’s market driving forward enough to generate some eye-popping sales for Penzance’s Pierce condos.