2022 Arlington Mid-Year Single-Family Home Review

Question: How did the Arlington single-family home market perform in the first half of 2022?

Answer: We have reached two years of the average single-family home (SFH) in Arlington selling for
over the asking price, but like the rest of the economy, things are finally cooling down. However, the
“cool-down” data won’t start showing up for another month or two and the data you’ll see here, a
review of the first half of 2022, reflects what was mostly a red-hot market.

More Competitive, Less Price Growth?
By nearly all measures, the first half of 2022 was more competitive than the first half of 2021, yet we
got lower average and median price growth in ’22 than in ’21, compared to the first half of the year
prior.

The competition in the first half of 2022 was unlike anything we’ve seen in Arlington before with the
average SFH selling for 4.2% more than the asking price, compared to an average of 1.8% over ask
in the first half of 2021. In 2022, an insane 79% of homes sold within the first 10 days on market,
compared to 70% in 2021 and 73% of homes sold at or above asking price in 2022, compared to 66%
in 2021.

With such intense demand, one would expect to see higher price growth in 2022 than in 2021, but
that’s not the case. The average and median price change in the first half of 2022 was 7.1% and
5.6%, respectively, compared to the first half of 2021. From 2020 to 2021, the average and median
price change was 9.6% and 16.6%, respectively.

I think the reason for conflicting demand and appreciation data is two-fold. First, the 2021
appreciation is based on the first half of 2020, which included the first few months of COVID
lockdowns when the market basically froze, so those prices may have been somewhat artificially
deflated. However, the counter argument to that is comparing the first half 2020 prices to 2019 prices,
we got a healthy 5% appreciation in average price.

The second reason, and this is just a theory, is that by 2022 the market (sellers and listing agents)
knew that buyers were accustomed to paying significantly over the asking price and thus set more
conservative (lower) asking prices to ensure competition instead of setting prices that were more
reflective of actual/likely market values. Doing so would artificially inflate some demand measures
without causing a coinciding explosion in prices.
Since the beginning of the pandemic in the first half of 2020, the market has experienced the
following:

  • Median price increased by $225,000 or 23%
  • Average price increased $197,000 or 17.5%
  • Average seller credit (towards buyer closing costs) decreased by 75%
  • The number of homes sold for $2M+ increased from 5% to 11% of total sales
  • The number of homes sold for under $1M decreased from 53% to 31% of total sales


22205 Leads Growth, 22201 Still Most Expensive
The 22201 and 22207 zip codes remain significantly more expensive than other Arlington zip codes
as the only two with an average price higher than the county-wide average. The 22205 zip code has
benefitted from tremendous growth over the past five years and led the way in the first half of 2022
price growth, adding 12.7% to its 2021 first half average.

After gaining 19.8% in 2021, 22204 settled back down to a 5.1% increase on average price in 2022
and remains the only zip code with an average price below $1M, but with more new construction
popping up throughout the 22204 neighborhoods, I don’t expect the sub-$1M average price to last
much longer.

Market Conditions Are Demand-Driven
We hear a lot about under-supply being the main cause of extreme competition and significant price
appreciation. While that is true — we have been running low over the last few years on homes actively
listed for sale — the reason for the low supply is almost exclusively demand-driven (high absorption
rates) not because the number of homes being listed for sale has collapsed. As you can see from the
chart below, illustrating the number of SFH listed for sale in each quarter over the last decade, the
amount of inventory coming to market has remained relatively consistent.

What has changed is how quickly those homes are being purchased and that has caused the
average number of SFH actively for sale to drop significantly, per the chart below. One thing that is
particularly well illustrated is how much more of an effect the Amazon HQ2 announcement
(November 2018) had on demand, and thus active supply, compared to the COVID market that had
such a dramatic effect on other regional and national markets.

Looking Ahead
We have absolutely seen a shift in market conditions over the last couple of months. Good homes are
sitting on the market through the first week(s), more sellers are reducing their asking price, and
buyers are negotiating more contingencies.

This is all, in my opinion, a very good thing. This is not the bottom falling out in Arlington, rather just
regaining some much-needed balance.

Will softer market conditions lead to a drop in prices? Maybe a little. There will certainly be some
sales from the first half of this year that seem extraordinarily high versus comparable sales in the
second half of the year, but I think on aggregate we won’t see much of a dip in pricing, mostly just a
leveling off.

The best support for that theory comes from the fact that we didn’t experience the same extreme shift
in demand/pricing during the COVID market that other regional and national markets did. We were
already experiencing a competitive, moderately high-growth market prior to COVID due to natural
market forces created by increased demand on the news of a massive new employer, Amazon, so I
expect our market to be able to hold most, if not all, of its value through the cool-down. I also expect
things to pick right back up in 2023 if interest rates come down a bit by the end of the year, like
they’re expected to.

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

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

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

Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate | @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

Arlington Single-Family Home Mid-Year Review

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

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

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

Overview: Prices Up, Listing Activity Up, Inventory Down

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

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

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

Bye-Bye Affordability

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

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

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

Price Distributions Skew High

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

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

Demand Intensifies

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

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

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

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