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.

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.