Prices

Question: Is it just me or have there been a lot more $2,000,000+ homes for sale this year than in the past?

Answer: The $2,000,000 mark used to represent a significant resistance point for homes in Arlington, reserved only for the best-of-the-best and difficult to sell, but we’ve seen a surge of $2,000,000+ homes for sale in Arlington this year and demand to absorb it.

One of the more interesting differences between Arlington’s real estate market and other expensive markets is that while a huge percentage of our homes sell for over $1M, we have very few homes that sell over $3M (link to previous article). For some context, there have been 82 single-family homes listed for sale for $2M-$3M in Arlington in 2020, but just 19 listed for sale/sold since 2010 for over $3M (four of them are currently for sale).

Below is a chart showing the number of single-family homes sold that were listed for $2M-$3M since 2010. 2020 also includes homes currently for sale or under contract that are listed for $2M-$3M (and we still have 5 weeks left in the year for more homes to be listed).

Here are some interesting details about the $2M-$3M single-family home price point:

The average sold price to original asking price from 2015-2019 was nearly identical, ranging from 94.1%-94.7%, but this year that average shot up to 96.5%. Also, from 2015-2019, the average days on market was 93 days, but in 2020 it dropped to 58 days. Both of these changes indicate a much stronger appetite from buyers for $2M+ homes.
Since 2010, 92.3% of homes were/are located in the 22201 (20.1%) and 22207 (70.2%) zip codes
I was surprised that only about half of the sales are new construction. I would have expected new construction to make up a much higher percentage of these high-price sales.
Prior to 2019, a $2M+ home usually meant at least 1/3 of an acre, but in 2020 it brings an average of just ¼ of an acre
Bedroom/Bathroom count has remained pretty consistent over the years, with an average of 5-6 bedrooms, five full bathrooms, and one half bathrooms
If you’d like to click through the $2M-$3M single-family homes since 2010, here’s a link!

If you’re as curious as I was about what the chart for $1M-$1.999M single-family homes looks like, it’s quite different. Enjoy!

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

Question: How much of Arlington’s high housing prices are attributed to new homes?

Answer: So far this year, the average sold price of a single-family detached (SFD) home in Arlington is $1,146,000, but if you remove the sales of new homes, which are averaging $1,810,000 in 2020, the average price for a SFD home in Arlington drops 7.4% to $1,060,000. Since 2015, the average price of a new SFD home in Arlington has increased by 21.6%, while the average price of resale homes has increase 25.3%.

Important note: I removed one sale from the 2015-2020 sales data; a January 2020 sale of 409/411 Chain Bridge Rd for $45M, because it is such an extreme anomaly in Arlington real estate data that it skews everything else too high. This is important to understand because most likely in other assessments of Arlington real estate data you see, this data point will be included and it will make it seem like the average sale price in Arlington, especially 22207, has increased much more than it actually has.

New Home Prices vs Resale Prices

The charts below compare the annual change in the average price of a new SFD home and a resale SFD home. The first chart shows all Arlington SFD sales and the second chart is just for the 22207 zip code which accounts for 54% of all new SFD home sales since 2015.

I was a little surprised by how uncorrelated average prices were between new and resale homes some years, I would have expected a strong linkage.

One data point that stands out is the huge jump in new home prices from 2017 to 2018, which seems to be tied to a significant drop in the number of transactions (lower supply) in 2018. It highlights just how sensitive the new home market is to supply swings and I wonder if that forecasts less growth in the future as more homes built in the last 5-8 years come up for resale, competing with similar new homes. I also wonder if a pause in buying by builders in the first half of this year may lead to a material shortage of new homes in 2021 and drive prices up for new homes selling next year.