Review

2022 Arlington Condo Review

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2022 Arlington Condo Review

Question: How did the Arlington condo market perform in 2022?

Answer: Last week, I detailed the 2022 Arlington Single-Family market performance so this week we’ll do a deep dive into Arlington’s 2022 condo market performance.

Like the rest of the housing market, the condo market started the year off strong due to low interest rates and a return to more normal condo buying habits, after the flight from condos seen during the ’20-’21 pandemic years. Despite the interest-rate driven slowdown in the second half of the year, the aggregate performance of the condo market in 2022 was flat to slightly up, depending on how you look at the data.

The Condo Market Has Returned to Normal…

What is a normal condo market in Arlington? It’s hard to remember what a normal condo market looks like because we haven’t seen one since ~2017/2018. The market went red hot at the end of 2018 after the Amazon HQ2 announcement until being frozen by COVID in early 2020 and then from summer ’20 through 2021we saw a flood of condo inventory hitting the market as people left for more space, which kept prices from increasing like the single-family and townhouse market.

So what is normal? Normal is about 1-2% annual appreciation and an average over 30-45 days on market. When you strip out the gains related to more expensive new construction condos being sold and just look at resales of existing condos, you’ll see that the long-term norm for Arlington apartment-style condos is a modest 1-2% annual appreciation.

…Except Inventory Levels

However, there are some signs that we might see stronger appreciation in 2023/2024 due the supply of condos for sale trailing well behind the 10yr average. The chart below highlights just how extreme the transitions were into the post-Amazon HQ2 announcement market (Nov ’18) and then into the COVID market. With a very weak pipeline of new condo deliveries in Arlington, supply will come from an already limited inventory of existing condos for sale and should create some upward pressure on pricing.

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Data Highlights and Analysis

The following data is for apartment-style/multi-family condos (aka buildings only, exlcuding townhouse-style condos like you see in Fairlington) and does not include age-restricted condos (The Jefferson) or Coops (Riverplace). All prices are based on net sold price (purchase price less any seller-paid closing cost credits):

  • The average price of an Arlington condo increased by 2.6% to $502,000 and the median price increased 1.7% to $427,000. If you remove new construction sales from the data, the average price increased by only .6% to an average price of $463,000.
  • The average 1BR condo increased .1% with new construction included and .7% without new construction included. The average 2BR increased 5.4% with new construction as opposed to just 1.3% without new construction (2000 Clarendon had a lot of 2BR units).
  •  Since 2018 (five years), condos have appreciated by just 10-20%, depending on the sub-market you’re looking at and data you’re using, and almost all of that growth came in the ~12-14 months between the Amazon HQ2 announcement and COVID lockdowns. That appreciation drops by almost half when you remove new construction from the data. Single-family homes have appreciated about 2-3x+ faster over the last five years.
  • Most of the 5yr price appreciation of the 2BR and North Arlington market segments is due to higher priced new construction buildings that have come online during that time and not actual price growth. When removing new construction, the 5yr growth for a 2BR drops from 20.1% to 10.5% and for North Arlington from 18.1% to 9.9%.
  • Over the past five years about 2% of condo sales have been studios (no legal bedroom), 39% 1BR, 51% 2BR, 8% 3BR, and ~.5% have been 4+BR.
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“Standard” Condos in Rosslyn-Ballston Corridor Haven’t Budged

A lot of similar condo inventory was built in the early 2000s along the Rosslyn-Ballston corridor so it gives us a unique opportunity to look at a large, relatively similar data set. The chart below looks at net sold prices of 650-800 SqFt 1BR and 900-1200 SqFt 2BR condos that were built between 2000 and 2010 along the R-B corridor. This sub-market makes up about 11% of total condo sales in Arlington over the past five year.

Since the Amazon HQ2 driven appreciation from 2018-2019, the value of these condos has barely moved and in the case of the 2BRs, the average net price has actually fallen slightly each year since 2019. I expect appreciation to look better over the next five years, barring any jarring market forces like COVID.

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Condo Market by Zip Code

  • The Rosslyn market, carried by luxury buildings like Turnberry, Waterview, Wooster and Mercer Lofts, Gaslight Square, and the newly built Pierce, is the most expensive zip code for condos by a significant margin.
  • For those looking to snag a piece of real estate near Amazon HQ2, condos in the 22202 zip code are still reasonably priced but come at a cost of the highest monthly condo fee per square foot in Arlington.
  • 22207, one of the most expensive zip codes for single-family homes, is the second lowest $/SqFt of any zip code for condo purchases. This will probably be a deterrent for developers of Missing Middle who are considering building 5-6 unit multi-family buildings vs townhouse-style duplex/triplex properties.
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If you’d like data pulled for a sub-market you live in or are considering buying into, don’t hesitate to reach out!

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

Anonymous Lender Review of the “All-in-One” Mortgage

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Anonymous Lender Review of the “All-in-One” Mortgage

Question:   On social media, I have seen a new loan program advertised called the All in One mortgage.   Whom might this program benefit and are there any pitfalls to look out for?

Answer: With mortgage rates so high, we’re seeing new products or new angles on old products (like the 2-1 Buydown) and lots mixed information about why rates are high or where rates are likely heading in 2023 and beyond. So in keeping up with my promise to provide relevant, transparent information on the mortgage market, let’s talk about another buzzy product being discussed lately, the All-in-One Mortgage.

It’s a fairly simple product, but cutting through the marketing of it to know if it’s the right product for you isn’t easy.

The rest of this article is a guest column generously written anonymously by a lender at a local bank that offers this product, but wishes to remain anonymous so they could provide an honest review. So enjoy a brutally honest review of a mortgage product that isn’t as great as the marketing makes it seem…

The creators of the AiO claim in their marketing that this loan will pay off a homeowner’s mortgage faster than a traditional mortgage, but we have found this not to be the case and that the AiO may be more expensive than a traditional mortgage, on an apples-to-apples basis. 

The goal of this article is to provide a quick overview of this product, as well as discuss which situations the AiO may or may not be a good financial instrument for the purchase or refinance of a home.

Mortgage, Home Equity Line, and Checking Account “All in One”
The All in One (AiO) mortgage combines a mortgage, a home equity line of credit and a checking account, all in one financial instrument.   The AiO allows you to purchase a home just like any other mortgage, where you would apply for a pre-approval, shop for a home, and once a home is under contract, the AiO would fund the majority of the home’s purchase price.

In addition, you can deposit your pay into this account, and pay all your bills from this account, just like any other checking or savings account.   The account has an ATM card and allows automatic bill pay.    Finally, the AiO acts like a Home Equity Line of Credit (HELOC), allowing you to access your home’s equity should you have such life events as paying for a child’s wedding or building an addition to your home.

Whether this product is a good fit for you depends on your goals and priorities, so the following summarizes how the AiO fits with certain personal and financial goals.

AiO Recalculates Interest Daily, Not Monthly

A traditional mortgage charges interest on the outstanding balance as of the date of the last mortgage payment, and you pay interest on this balance for each day of the month until the next mortgage payment. In contrast, the AiO mortgage calculates interest daily, so if you deposit your paycheck in the account, this immediately reduces the balance on which interest is calculated.

Said differently, if you make an additional payment to principal mid-month, the AiO would calculate interest on the lower balance for the remainder of the month, whereas a traditional mortgage would not. The creators of the AiO mortgage share that this feature saves interest, which it does.

However, the AiO mortgage has a higher starting interest rate than a traditional 30-year fixed mortgage and the AiO does not have a permanently fixed rate of interest, so the interest rate on this product may be higher or lower in the future, as it is market-driven.

Hence, any interest savings due to the AiO paying interest daily can be lost due to the higher initial interest rate and / or increases in the program’s interest rate down the road.   This does not mean that the AiO would not save on interest; however, there are many instances when the amount of interest you pay may be higher despite the advantages of daily interest recalculations, so be sure to discuss interest rate risk with your financial advisor.

Early Mortgage Pay-Off, True or False?

The creators of the AiO mortgage claim that the AiO will pay off your mortgage far faster than a traditional mortgage. To evaluate this claim, we’ve employed the assistance of a technical financial expert, who has both 20 years of experience in the mortgage industry and, before joining the mortgage industry, a finance role for a Fortune 300 company. As this individual’s company also offers the AiO product, the individual wished to remain unnamed.

The findings were that, on an apples-to-apples basis, the AiO mortgage did not result in the mortgage being paid off materially faster than a traditional mortgage. We used the simulator on an AiO mortgage web site, and summarized the results below.

For our analysis, we assumed a purchase of a $1.0M home, a 25% down payment, making the loan principal $750,000.  We assumed a 6.5% interest rate on the 30-year fixed loan, the homeowner’s household has $15,000/month after tax income and that household had $4,200 remaining of their take home pay after payment of the mortgage and all other monthly expenses.

The AiO website automatically assumes the following:

  • All of the $4,200 remaining after paying expenses is used to reduce the loan’s principal
  • The AiO web site compares the above to a 30-year fixed mortgage with assumptions above, but does not assume any additional payments are made to principal
  • The AiO web site concludes that your mortgage would be paid down in 132 months (11.0 years), but the rapid payoff of the AiO mortgage is primarily a result of the assumption that extra payments are made in the AiO scenario and not the traditional

If the same extra principal payment of $4,200 per month was applied to a traditional mortgage, the 30-year fixed mortgage would be paid off in under ten years and have a lower amount of interest paid, as the AiO would have a longer pay down period and higher interest rate.

Alternatively, if we assume that neither the AiO or the 30-year fixed mortgage pay the extra $4,200 toward principal each month, the AiO would be paid down seven months faster than the 30 year fixed (353 months vs. 360 months); however, due to the higher interest rate for the AiO, the 30 year fixed is forecasted to pay –  by the AiO’s own calculator – over $490,000 less in interest than the AiO mortgage.

Ability to Borrow not Unique to AiOs

If one has an AiO mortgage, the amount of principal paid down is, at any time in the future, available to be taken back out in cash.  For example, ten years after you purchase your home, if you have a medical emergency, you can use the equity in your home to obtain cash almost as fast as one could take cash from a savings account.

The AiO is not the only mortgage product to offer this flexibility. Traditional mortgages (e.g. 30-year fixed loan) offer HELOCS that allow easy access to cash tied to your equity, once the line of credit is approved.

In both cases, you will be charged a market interest rate on funds borrowed against your home’s equity.

We do want to share a word of caution that the largest risk to any form of a HELOC is that one may spend money on goods and services that would not have been purchased if funds from the HELOC were not easily available.

A Worthwhile Option for Investment Properties

The AiO mortgage is the only product I know that will allow one to have a HELOC secured against one’s investment / rental property, as most HELOCs are for primary residences or (sometimes) second homes.   In addition, the AiO allows one to borrow up to 70% of the value of the home, with a limit of $1.0M. Any current mortgages must be closed with the balance rolled into the AiO, and cash back is limited to $250,000.

While an investment property HELOC is not an advertised use for this product, in our opinion, this is one of the best uses of the AiO mortgage.

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 @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

2022 Arlington Mid-Year Single-Family Home Review

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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.

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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.

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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. 

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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. 

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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. 

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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 @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

Q1 Condo Market Review

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Q1 Condo Market Review

Question: How is the condo market performing so far in 2022?

Answer: The condo market has looked very different than the single-family/townhouse market since COVID struck. While the latter has exploded, the former struggled initially, but has stabilized and strengthened over the past 12 months. With the first quarter of 2022 behind us, let’s look at the data driving the Arlington and Washington DC condo markets.

Prices Mostly Flat in Arlington and DC

I generally find that median, instead of average, price changes are more reflective of what most buyers/sellers experience in the market. The median condo price in Arlington is up 8.1% year over year in Q1 2022 and 2.6% in DC. However, you can clearly see that the overall price trend over the last two years is mostly flat in both markets and up slightly from pre-pandemic prices.

Interestingly, the average and median $/SqFt in DC has decreased slightly over the last 12 months, but increased slightly in Arlington over the same period. My best guess is that it’s a reflection of less demand for smaller downtown condos (smaller homes tends to have higher $/SqFt).

Both Arlington and DC had noticeable increases in average sold prices year over year in Q1 2022, jumping 10.3% and 8.2%, respectively, with similar increases in Q4 2021. My best guess on this trend is that it’s a reflection of some buyers giving up on the single-family/townhouse market and turning to larger, more expensive condos as an alternative.

Months of Supply Finding its Level

Months of Supply, a metric that measures supply and demand (lower numbers reflect a more competitive market, favoring sellers), seems to be leveling off with relatively similar Q4 2021 and Q1 2022 readings in Arlington (~1.25 months) and DC (~2 months) after sharp increases during the first 18 months of the pandemic.

From a housing economics perspective, these readings suggest a strong sellers’ market in which one can expect competition and price appreciation. It will be interesting to see if this plays out in Q2 as more supply comes to market (Q2 brings the most inventory to market) while interest rates rapidly increase.

Sales Noticeably Slower in Arlington and DC

Despite signs of a strong, more competitive market, the overall pace of the market remains relatively slow with average days on market for Arlington and DC hovering just under 40.

Active and New Listing Volume Still High

The number of condos being listed for sale in Q1 2022 was less than a year ago, but still high relative to previous Q1 listing volume in Arlington and DC. This fact makes it impressive that Months of Supply (measures supply and demand) has dropped to strong seller market levels because it shows that, despite an unusually high number of people moving out of condos, there’s significant demand to absorb the new inventory.

Looking forward, I expect that higher interest rates will have a much more immediate and significant impact on condo demand than on single-family and townhouse demand and I think that Q2 condo data will reflect that.

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.

2021 Real Estate Market Review: Single-Family

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2021 Real Estate Market Review: Single-Family

Question: How did Arlington’s single-family home market perform in 2021?

Answer: Last week we reviewed the performance of the condo market so this week we will take a look at the market that has been a topic of conversation across the country for well over a year – the single-family (detached) housing market.

Appreciation Was Strong, Not Exceptional

The 2021 Arlington single-family market was fiercely competitive and experienced its highest appreciation in years. However, the shift in market conditions (demand and price appreciation) was not nearly as dramatic as other regional or national markets that have made headline news over the last 12+ months.

Why? Because thanks to strong market fundamentals and Amazon’s 2018 HQ2 announcement, the Arlington market was already exceptionally competitive and expensive, relative to most other regional and national markets, prior to the COVID-driven housing market mayhem.

Here are some highlights from the chart and table below (22206 and 22209 are not included due to lack of single-family homes sold):

  • The average and median price of a single-family home in Arlington increased in 2021 by 6.2% and 7.2%, respectively. Excellent appreciation for any homeowner, but not the double-digit appreciation other regional and national markets experienced last year.
  • Nearly 50% of homes sold for more than the asking price and didn’t last more than one week on market
  • More single-family homes were listed and sold in 2021 than any of the last five years. Had supply been closer to the ~1,000 homes sold in the previous three years, I suspect average and median prices may have climbed closer to double-digit year-over-year increases.
  • The median price of a house in Arlington exceeded $1M for the first time in 2021. The average price climbed above $1.2M in 2021 and has been above $1M since 2018.
  • The average buyer paid 1.1% over the asking price, which equates to about $13,000 over ask.
  • Of the homes that went under contract in one week or less (just under half), the average buyer paid 3.7% over the asking price
  • In 2017, the majority of homes (39%) sold for less than $800k, in 2021 just 15% of homes sold for less than $800k (this includes teardowns) and 19% sold for at least $1.6M.
  • In each of the last three years, over 40% of homes have sold for $800k-$1.2M

Shake-up at the Top of the Zip Code Rankings

We have a new club house leader in highest average sold price by zip code! With a 15% year-over-year increase in average price, 22213 (western Arlington) finished 2021 with the highest median and average sold price.

But wait, it gets even more interesting! Despite boasting the highest median and average price, the 22213 zip code actually has the lowest average $/SqFt, 4th lowest cost per bedroom, highest average year built by 10+ years, and tied for largest average lot size. So depending on how you look at it, 22213 is the most expensive or best value!

It’s also worth noting that 22213 has the fewest sales of the zip codes I included, with barely enough total sales for me to be comfortable using it here.

The 22201 zip code, which surrounds the Rosslyn (well, Courthouse)-Ballston Corridor, commands the most money for the least house and yard with by far the highest $/SqFt, $/Acre, and $/Bedroom.

Something I would like to highlight with the data below is that change in average price is not necessarily reflective of actual appreciation of individual homes. For example, while 22201 and 22202 show 1% and 3% year-over-year price change, homeowners in those neighborhoods can rest assured that their home almost certainly appreciated more than that in 2021. The uncomfortably low change in average price can likely be attributed to the property mix that was sold in 2021 rather than actual appreciation. Real estate data can be difficult and full of caveats when you’re dealing with relatively small sample sizes.

New Construction, Expensive Homes Lead the Market

The average price of a new home increased 13.1% in 2021and exceeded $2M for the first time ever. New homes are bigger than ever, with the average total finished square footage coming in at just under 5,300 SqFt and averaged 5.5 bedrooms with 5.1 full bathrooms (nearly one full bathroom for each bedroom).

In the last table, I broke the market in each year down by price range (lower 25%, middle 50%, and upper 25%) to see how each cross-section of the market performed year-over-year. The 8.1% jump in average price of the lower 25% in 2020 was likely due to the wave of people leaving shared living (apartments/condos) and the 8.4% increase of the upper 25% in 2021 is likely due to the increased demand of larger, new homes that offer more work-from-home and at-home schooling space for families and low interest rates allowing buyers to increase their budgets.

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.

Arlington Single-Family Home Mid-Year Review

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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.

Quarterly Review of Arlington/DC Area Real Estate

elieliresidentialcom Arlington, Buyer, Home Owner, Investor , , , 0 Comment
Quarterly Review of Arlington/DC Area Real Estate

Question: How did Q1 compare to other quarters and what does that mean for Q2?

Answer: The housing boom has been front-and-center in the national news cycle for about six months now and Q1 blessed many homeowners and builders with amazing results, while inflicting similar levels of frustration on buyers.

Despite the national, regional, and local craziness the Arlington single-family home (SFH) and townhouse (TH) markets actually didn’t look that different in Q1 2021 compared to the last couple of (post-Amazon HQ2) years so the pandemic-related housing boom hasn’t created nearly the systemic shock here as it has in other local markets like Fairfax County and Loudoun County. Months of Supply (measure of supply and demand) for SFH is down 36% YoY for Q1 in Arlington, but over 50% in Washington DC, Fairfax County, and Loudoun County with Loudoun County SFHs down an incredible 73.9% YoY in Q1.

Arlington Quarterly Market Performance

First, let’s take a look at a breakdown of the Arlington SFH/TH quarterly market performance, with some highlights bulleted below:

  • If you’re buying a SFH/TH that has been on the market for 10 days or less, prepare to pay an average of 2-3% over the asking price. 12% of buyers since 2020 have paid 5% or more over the asking price.
  • Since 2020, about two-thirds of SFH/TH properties go under contract in 1-10 days and only 21% have stayed on market for more than 30 days
  • You can expect price escalations on hot properties to be even further above the asking price in Q2 compared to Q1, based on historical data. The only exception to this was in 2020 because Q3 functioned like Q2 due to a delayed spring market caused by the pandemic.
  • Expect about one-third of 2021’s SFH/TH properties to be listed for sale in Q2, the most of any quarter by a significant margin
  • Among SFH/TH properties that went under contract in 1-10 days in Q1, the average sold price of those homes increased 11.8% over Q1 2020. Last year there was a 5.7% increase in average sold price of hot properties compared to Q1 2019.
Contract Year/QuarterAvg Sold to Org Ask (Properties 1-10 Days On)% 1-10 Days on MarketListing VolumeListing % of Annual Total
2016100.7%38.8%1640100%
Q1100.7%38.9%40525%
Q2101.0%46.6%55534%
Q3100.4%34.0%40224%
Q4100.2%31.3%27817%
2017100.9%41.0%1744100%
Q1101.0%47.1%48728%
Q2101.3%46.1%58733%
Q3100.7%36.5%41524%
Q4100.1%28.4%25515%
2018101.1%43.0%1614100%
Q1101.2%50.4%40025%
Q2101.5%48.1%54934%
Q3100.9%39.4%39024%
Q4100.5%31.3%27517%
2019101.9%56.9%1451100%
Q1101.8%63.4%38927%
Q2102.2%61.0%47833%
Q3101.9%54.6%34624%
Q4101.1%43.8%23816%
2020102.2%59.5%1600100%
Q1102.4%65.4%35622%
Q2101.8%58.1%39925%
Q3102.7%63.9%49331%
Q4101.9%50.0%35222%
2021102.7%60.3% 
Q1102.7%60.3% 

Northern VA and Washington DC Market Performance Comparison

As noted earlier, the pandemic created a much sharper change in the real estate markets outside of Arlington because Arlington had already experienced similar changes due to Amazon’s HQ2 announcement in November 2018. Below are some charts comparing the SFH markets (and one comparing the condo markets) in Washington DC, Arlington, Fairfax County, and Loudoun County, with some highlights bulleted below:

  • In 2018 and most of 2019, Months of Supply for SFH in Washington DC, Fairfax County, and Loudoun County was 2-3x higher than Arlington (indicating a more favorable market for buyers). In Q1 2021, Fairfax County and Loudoun County had about half the Months of Supply as Arlington and Washington DC, clearly a sign of buyer preferences for more space, lower $/SqFt, and de-prioritization of commute time and walkability.
  • The most dramatic pandemic-related market shift for Arlington has been the condo market going from the most favorable market for sellers pre-pandemic to a near tie with Washington DC for least favorable, by a significant margin
  • Fairfax County stands out for the huge drop in active SFH home listings, dropping from an average of nearly 2,000 listings/quarter in 2018 to less than 500 in Q1 2021
  • The data suggests relatively little change in average prices in Q1 2021 in Arlington and Washington DC, but I think this is more about the data composition than a reflection of actual pricing because everything I’ve experienced in the market suggests strong price growth in Q1 2021
  • Median days on market for SFH has been below 10 days in all four markets since the pandemic began

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

State of the Arlington and Northern VA Housing Market

elieliresidentialcom Arlington, Buyer, Home Owner, Investor, Seller , , , , 0 Comment
State of the Arlington and Northern VA Housing Market

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

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

Single-Family and Townhouse Prices Up

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

Condo Market Better, Slow Improvement Expected

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

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

Arlington Months of Supply

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

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

New Listing Volume in Arlington

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

Dramatic Shift in Fairfax and Loudoun

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

Northern VA Condo Supply

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

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

2020 Housing Market Review: Condos

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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.

2020 Housing Market Review: Single-Family Homes

elieliresidentialcom Arlington, Buyer, Home Owner , , , , , 0 Comment
2020 Housing Market Review: Single-Family Homes

Question: How did Arlington’s single-family housing market perform in 2020?

Answer: Despite the pandemic, the single-family housing market produced strong growth locally and nationally, primarily due to interest rates setting record lows throughout the year and a sharp change in housing criteria due to ongoing work/school-from-home demands. While Arlington experienced strong growth, less expensive markets further from DC saw sharp increases in demand and explosive growth.

More Expensive…

In Arlington, the average and median price for a single-family home increased by 4.9% and 5.7%, respectively, after similar increases in 2019. The growth showed up in all ends of the market, including Arlington’s most expensive homes, with another record-shattering year for the number of $2M-$3M homes sold. Only 17% of single-family homes sold for less than $800,000 and about half of those were tear-downs or required major renovations.

Volume Still Down…

Despite a very slow rollout of homes for sale in the first half of the year due to lockdown measures and pandemic fears, market volume caught up quickly in the second half of the year, ending up with 13 more homes sold in 2020 than in 2019, but still ~10% lower than 2015-2018.

Faster Pace Sales…

Average and median Days on Market dropped for the 5th year in a row to 7 and 22.2 days, respectively, and the percentage of homes selling in the first week increased for the 5th year in a row, hitting the 50% mark in 2020. The average and median price for a home purchase within the first week on the market was 1.1% and 2% over the asking price, respectively. The takeaway? If you’re searching for a home, be prepared to act quickly and pay above the asking price for something new-to-market.

Six Interesting Charts

Below, I put together a series of charts to visualize how the Arlington housing 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.