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.

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.

Positive Signs in the Condo Market, Finally

Question: Can you provide an update on how the condo market is doing?

Answer: Arlington’s condo market began shifting in favor of buyers this summer, after two years of a very strong seller’s market, when historical numbers of condos began hitting the market at the same time demand subsided. I’ve written about these changes four times since (falling values, visualizing high inventory, first signs of a trend, and first signs of a shift).

November Might be a Turning Point

For the first time since June, we’ve seen a reduction in the Months of Supply (MoS) of Arlington condos. Months of Supply is a great measure of supply and demand (lower MoS = stronger market with higher demand and less inventory).

While the reduction in MoS is slight, it’s a positive sign nonetheless that the market is either closer to finding its level again or may soon show signs of strengthening. However, one month, particularly a winter month, is not enough to establish any real change, we will need to see what the next 3-6 months bear.

Figure 1

Multiple Key Indicators Show Positive Signs

My hope for a settling or strengthening of the condo market is not solely based on one metric, there are other key metrics that suggest November may be the first month of a settling or strengthening condo market.

Absorption Rate (Figure 2), a measure of demand, increased ever-so-slightly in November, the first increase since May, albeit still down nearly 68% from the December 2019 Absorption Rate.

The number of condos for sale during November decreased for the first time since May (Figure 3), albeit slightly. The better news, however, is that the decrease in total condo inventory doesn’t seem to be caused by frustrated sellers pulling their condos off the market, rather due to promising contract activity (Figure 4), which was up 41% year-over-year in November.

Figure 2
Figure 3
Figure 4

Looking Ahead, Eyes on March-May

Over the next few months, I’ll be looking closely at whether these trends (stronger demand, falling inventory) continue, find a level, or revert back to what we’ve seen since this summer. I’ll be particularly interested in what year-over-non-COVID-year numbers looks like and if we settle into normal spring activity for inventory and demand.

For example, while the charts above are positive indicators for the condo market, Figure 5 shows just how much inventory (new listings) is still coming onto the market, with November generating nearly 79% more condo listings in 2020 than in 2019, but only a 41% increase in contract activity.

Figure 5

I think that March-May 2021 are going to be very interesting months, statistically speaking, and will be excellent indicators of what the market might look like for the next few years, until the next major market event (e.g. Great Recession, Amazon HQ2, COVID). I think/hope that by then, we will also have a better understanding of how the Federal Government and private companies will address teleworking beyond COVID and thus whether commute time will be prioritized differently by buyers.

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

Condo Values Fall as Inventory Builds

Question: Have you seen a decrease in condo values with all of the inventory currently on the market?

Answer: Over the last few months, I’ve written about the shift in the condo market (links here and here and here), which began around July and can be attributed to a historical number of units listed for sale while demand simultaneously dropped due to COVID. Indicators such as Months of Supply, Absorption Rate, Days on Market, and Sold to Ask Price Ratios have shown a more favorable market for buyers for the last four months, but it takes longer to establish changes in pricing (need enough data).

It’s been my experience working in this market over the last few months that prices seem to be down about 2-5% in many sub-markets, compared to late 2019 and the first half of 2020 (after surging since 2018). However, I dug into the data a bit more to see how condos that went under contract after July 15 compare to the sales of condos that went under contract from Jan 1 – July 14 2020. I used July 15 because that is when I really start to see changes taking shape in the condo market.

One point I’d like to make prior to sharing the data findings is that the data is based on condos that have sold/closed and there are many condos still sitting on the market or under contract that won’t show up in this analysis. The market has also worsened (for sellers) each month since July, so properties that went under contract in July/August likely did better than those later on in the year. Therefore, it’s likely that as the units close that are currently struggling to sell, or just now coming to market, the data will get worse (larger decrease in values).

Data Summary

I chose to segment the market in a few different ways to get a sense of how different sub-markets are experiencing the condo shift. When comparing relatively small data sets (like we have here), the best conclusions can be drawn by analyzing market segments that have lot of similarities such as condos along the R-B Corridor built in the last 20 years or mid-1900s (older) buildings. Here are some highlights from the data sets I reviewed:

  • 1BR and 2BR condos along the R-B Corridor, built in the last 20 years, sold an average of 2.2% and 5.8% less, respectively, after mid-July. If you look at $/sqft, prices have dropped 1.1% and 3.6%, respectively. I believe this is the data set that most accurately reflects what’s happening in the condo market.
  • Older, less expensive condos across the County seem to have held onto their values better than newer, more expensive units. More expensive condos are closer in price to townhouses and I’ve seen more buyers favor lower-priced townhouses over higher-priced condos, as a result of COVID concerns. Buyers of less expensive condos don’t have many alternatives at that price point, other than renting.
  • The apparent appreciation of South Arlington since July 15 can be attributed to a different distribution of sales (higher volume of more expensive properties and lower follow of less expensive properties) than comparable units actually selling for more
  • The indicators (Sold to Ask, % Sold in <7 Days, and Days On) are what I find most interesting and a sign that the actual decrease in condo pricing isn’t fully reflected yet in the current data set:
    • Across every sub-market, including those where the average price didn’t drop, buyers negotiated significantly more off the original asking price. Earlier in the year, three sub-markets averaged buyers paying at least full price and since July 15 there were none.
    • The most interesting indicator is the huge drop in the percentage of units that go under contract within the first week.

Looking Forward

As I mentioned in the third paragraph, I expect future data sets for condos sold in the last quarter of 2020 and very early 2021 to show even larger decreases in values, relative to the first half of 2020. However, I think that with more positive news on COVID-19 vaccines, the start of the 2021 spring market, and more people returning to work (and realizing they value commuting convenience over extra space) I believe there’s a good chance the negative trends of the last 4-5 months will level off soon and begin to reverse by February/March.

I will continue to track trends in the Arlington condo market and provide transparency into what we’re experiencing. The townhouse and single-family home markets remain strong and I fully expect another appreciation cycle in 2021 for those sub-markets.

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

Housing Market Update, Condo Slide Continues

Question: Last month you wrote about troubling signs in the condo market. Do you see things leveling off or getting worse?

Answer: The trends I wrote about last month – shifting demand in single-family housing out west and troubling signs in the Arlington/DC condo market – continued through September with the developing changes in the condo market being the most noticeable. Let’s take a look at what we’re seeing in the housing market through September…

Arlington/DC Condo Inventory Piling Up

The number of condos listed for sale in Arlington during September (261) ranks as the 2nd most in any month over the last 10+ years, trailing a record-setting April 2016 volume (268) by just seven. The last time we had this much active condo inventory on the market in Arlington was September 2017 and you have to go back to September 2016 for a month with higher Months of Supply (measure of supply and demand).

Our neighbors in DC blew past all-time highs over the last 10+ years with 969 condos listed for sale, well above the record set this past July (863). Three of the four months with 750+ condo listings in DC have taken place in the last three months. You have to go back to June 2011 for a month with more active condo inventory in DC and July 2012 for a month with higher Months of Supply.

Fairfax and Loudoun County Condos Doing Fine/Better

While Fairfax and Loudoun County condo markets are seeing a similar late-season surge in listings, those markets are doing a better job of absorbing the inventory, so Months of Supply measures are still much more favorable for sellers with Fairfax County getting only slightly worse in 2020 and Loudoun County actually getting even more competitive.

Arlington Single-Family Market Stable

Arlington’s single-family market remains stable and is more reflective of the slight slowdown we expect around this time of the year, especially one month from an election. Single-family homes are still selling at peak prices, albeit sometimes with slightly higher days on market and fewer offers than earlier in the year.

We’re experiencing unusually high listing volume for this time of year, but that was expected given how little inventory was listed this spring/early summer. The number of single-family homes listed for sale in the 3rd Quarter of 2020 is up 42.5% over Q3 2019, but active listings are up just 2.1% for the same period, suggesting that the market has had no problems absorbing the extra inventory…and higher prices.

Sellers have not missed the memo that prices and demand are up in Arlington for single-family homes. September is the first month in 2020 that the median asking price of active single-family listings dropped below $1.5M.

I hope you’ve found this market overview 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.

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. Call me directly at (703) 539-2529.

The Shifting Condo Market

Question: I’ve seen a lot more condos come to market and also some staying on market longer than before, is that part of a larger trend in the condo market?

Answer: In July, I predicted there would be a surge in housing inventory that was held off the market this spring because of COVID. That has proven to be moderately correct for single-family housing and very accurate for condos. The market has had no trouble absorbing the extra single-family housing, albeit with less competition than before, but the condo market has not absorbed the extra inventory and has undergone a significant shift in the last two months.

In short, listing volume for Arlington condos reached historically high levels in July and August, absorption (demand) is down, and months of supply is the highest it’s been since the fall of 2017.

Historically High Listing Volume

July (253 listings) and August (229 listings) had the 5th and 13th highest months for listing volume in the last ten years. Prior to this year, the top fifteen months for condo listing volume fell in April or May (peak demand offsets higher listing activity), with the exception of June 2015. This is the first time that the number of condos listed in July or August has ever exceeded 200.

Pre-Amazon HQ2 Demand

Since Amazon announced plans for HQ2 in November 2018, condo demand was through the roof with 15 straight months of more condos going under contract than listed for sale (over 1.0 in the chart below), beginning January 2019. Absorption levels, a strong indicator of demand, are now more reflective of 2016-2017 which brought very little real appreciation in the condo market.

Monitor Months of Supply

The Months of Supply metric combines inventory levels and rate of absorption (supply and demand). It measures how long it would take to sell out of existing inventory given the current pace of sales. Most housing economists say that ~6 months of supply is needed for a well-balanced housing market, a number we’ve never come close to in Arlington.

Given that it takes ~6 months of supply for a balanced market, Arlington is still very much a seller’s market, but nowhere close to what it’s been over the last two years. In August, Months of Supply exceeded 2.25, higher than it’s been since October 2017 (2.32). Compare that to December 2018 – March 2020 with an average of .67 (just over two weeks of supply) and high of .88, and it becomes clear why many buyers and sellers are experiencing a different market now than they were as recently as June.

Condo Market Stronger Across Northern VA

The rest of Northern VA also experienced an increase in condo supply in July and August, but not nearly to the extent of Arlington. Absorption (demand) has also remained pretty close to the strong numbers seen since January 2019. As a result, Months of Supply for the entire Northern VA condo market has increased slightly over the last two months and fits normal seasonal patterns.

What About Washington DC?

It’s worth noting that while the overall Northern VA condo market is performing well, the Washington DC condo market looks more like Arlington. In July and August, Month of Supply (2.73 and 2.80, respectively) reached the highest levels since October 2012 and were the first and third highest monthly listing volume over the last ten years. July (863 condo listings) is the first time in over a decade that more than 800 listings came to market. Previously, the record was 762 set in September 2019. There were 757 condos listed for sale in August.

What’s Next?

It’s still too early to know if/how prices will be affected, but it almost certainly means longer days on market and fewer multiple offer scenarios. The effect on pricing will likely depend on whether this is a short-term shift that will correct itself come Q1 2021 or a more long-term change in urban buying patterns. My money is on this being short-term and the market returning closer to its two-year averages by February or March 2021.

In the meantime, I think we’re in for a frustrating few months for many condo owners due to the combination of surging listing volume (increased supply), an upcoming Presidential election (fear of an unknown future), and uncertainty around the timing of a widely available COVID vaccine (less demand for multi-family/urban living).

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

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.

New Condo Building, 2000 Clarendon, Banning Smoking

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

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

2000 Clarendon To Be Smoke-Free, LEED Certified

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

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

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

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

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

2000 Clarendon Sales Update

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

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

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

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

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.