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Ask Adam: Spring Real Estate Market

by ARLnow.com — February 21, 2012 at 1:10 pm 3,301 49 Comments

Editor’s Note: This monthly sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty. Please submit follow-up questions in the comments section or via email.

What should we expect from the spring real estate market in Arlington?

It feels like spring is already here in some ways. The sun is out and daytime temperatures have been hovering around the mid 50’s. Buyer demand is as high as I have seen it in recent years. People are even showing up to open houses. This is unusual for February.

Besides the cherry blossoms, the only thing missing is housing inventory. For example, I started working with a new client about three weeks ago. He wants a one-bedroom condo in Clarendon within a generous price range. There are lots of those, right? Unfortunately not. We have yet to look at a single home, because there are not any available for him to even consider.

In recent years we kept our fingers crossed for buyer demand to pick up. We now have ready, willing and able buyers, but not enough homes to go around.

Home owners have long been conditioned to believe that spring is the best time of year to sell a home. I’m hoping that the current drought of housing inventory in Arlington will soon be quenched by home owners throughout town that are simply biding their time until the “spring market” before they list their homes. Personally, I’ve been advising potential sellers to get their homes on the market as soon as possible — while competition is low.

Where are the current home buyers coming from?

We are all aware that mortgage interest rates are at all time lows. What you may not be aware of is that rental rates have been climbing to record-breaking numbers in Arlington. For a mid-range two-bedroom apartment in Clarendon you could easily be looking at $3,500 per month. Because of low interest rates and high rental rates, it’s not hard for many would-be-renters to build a case for transitioning to home ownership.

Does this also affect the higher end market?

I think it does. I call it trickle-up economics. For example: Sarah sells her condo in Ballston to a first time homebuyer so she can purchase a townhouse in Rosslyn. Jim sells Sarah his townhouse in Rosslyn so he can purchase his dream home in Lyon Village. As you can see in this example, the sale of Sarah’s condo to a first time home buyer, trickled-up to affect the purchase of a higher priced home in Lyon Village.

Advice for Home Buyers

If you are considering a home purchase in Arlington, I recommend taking all the time you need to find the perfect home, but be prepared to move quickly when you find the one you like. Complete your mortgage application and have a pre-approval letter ready to go. Make sure you are receiving notifications of new listings as soon as properties become available. Talk to your Realtor about ways you can strengthen your offer outside of price and about trying to find homes not already on the market.

Advice for Home Sellers

If you are considering selling a home in Arlington, you must first understand that though you have momentum on your side, this is not time to be lazy or unrealistic. You are going to get more money for your home and sell it quicker if it is move-in ready. Take time to make all the fixes that are going to come up in a home inspection anyway. Pick a price that will likely bring you a contract within 30 days, without having to make adjustments. The last thing you want is a stale listing that everyone assumes there is something wrong with.

Please Ask Questions

As a regular contributor on ARLnow.com, I would like the opportunity to answer any questions you have about real estate, the local market and Arlington in general. Answers will be posted in upcoming articles.

Please feel free to post questions below or send them to me at adam@arbourrealty.com.

  • DO?

    I see you are a green company. Do you do energy audits?

    • http://arbourrealty.com/communities/arlington-community-information/ Adam

      We don’t conduct energy audits ourselves, but have some great partners who do that I am happy to share. We will also subsidize the cost of a home energy audit for our clients.

  • Ty

    arlington such a rip off man

    • Have house, won’t sell.

      Rip off? By rip off do you mean that it’s the only housing market in the Country where prices are actually going up?

      • DSS10

        That funny I heard the same thing in Las Vegas in 2007!

        A house is a home first an investment second. I personally think the rent number quoted in the article is a bit inflated. I think what you should be thinking is that if and when interest rates go up (~3 years form now), what will happen to housing prices……. No one knows, it’s a function of wage growth and a lot of out side factors but you will have a house with a mortgage and the argent who sold you the house will have the sales commission.

        • AllenB

          To you maybe, but to me my condo is equal parts home and investment. It’s a big part of my financial retirement strategy as well as a great place to live now.

          • T.G.E.o.A

            Better off pulling cash out your place and invest it in an S&P 500 index fund. Real estate as a significant investment vehicle is a horrible idea.

          • AllenB

            Like I said, it is PART of my investment strategy. And over time, real estate is a solid investment when viewed as a long term asset and not a quick buck. I’ve done quite well with it as I’ve owned it for several years – bought low and worth a lot now.

        • R. Griffon

          > when interest rates go up, what will happen to housing prices……. No one knows

          Prices would certainly fall under such a scenario (all other things being equal). The real question is just how fast they will rise. If done slowly enough, the combined forces of increasing interest rates with inflation and increased demand could yield a more or less neutral net. But if done relatively quickly, combined with flat inflation and only steady (or even decreasing) jobs, the effect could be fairly dire.

          If I were looking to sell in the next 5 or so years, I’d hold on for now and wait until interest rates start to climb again. If I were looking to buy, then I’d go ahead and do it soon-ish. Prices may fall, true, but those gains will be lost to higher interest payments unless you’re buying with cash. In which case you probably don’t even care about the difference anyways.

          • thatguy

            Agreed 100%. People don’t buy homes based on price, they buy them based on the monthly payment. The bank approves your mortgage based on what your monthly payment is going to be compared to your monthly income. Investors looking to rent out properties buy homes based on a monthly payment being less than what they’re collecting in rent. When rates rise, a larger potion of the home buyers payment will be interest, which will ultimately reduce the amount of principal they can borrow. So unless people all of the sudden show up with larger down payments or salaries increase beyond the rising inflation rate (I would not hold my breath on that, if anything our purchasing power is most likely going to be a lot less in 5 years), there’s is zippy chance home prices will stay the same or increase.

            The second the Fed raises rates, the housing market will come to a stand still. So unless you’re buying a home today to sit on for 30 years to come or are finding an incredible deal (trust me you’re not in Arlington because REO’s rarely exist or make it to the common buyer) it would be well worth renting.

  • JamesE

    I am holding on to my 1 bedroom condo until the end of time.

  • Have house, won’t sell.

    Ty = must be a renter. Ohhh, yeah that must be a rip off, man.

    • Ty

      I hooked up with your mom

      • Eric

        bahahahaha! owned! TY>Have house, won’t sell…

    • Sharon

      I own and I do feel Arlington is high in price. Denying that is silly. It is almsot border line rip off. Have House you need to think a little bit.

  • bob32

    In all my years in Arlington, I’ve never heard of “Arbour Realty.” Never even seen a listing from them. Not sure what makes this guy such an expert–although his vague, obvious observations aren’t anything anyone would debate.

    • Josh S

      What’s equally disturbing is that if you took all of the “Spring Outlook,” “Market Summary,” and similar reports written by local agents over the years and put them end to end, you’d have a line of vague, obvious observations stretching to the moon.

      • DSS10

        It’s called “Broker Babble.”

    • Have house, won’t sell.

      Maybe that’s because they just started up a few years ago. Duh.

    • http://www.onlineinjurylawyers.com NimaS

      bob32, I see signs for them often. Maybe you just haven’t been in the market to buy or sell a home which would account for why you have never seen them. Or you’re just not very observant.

      Thanks for posting this information. Will be sure to keep you in mind when I sell!

  • National Association of REALTORS(tm)

    The best time to buy is always “NOW.”

    • http://arbourrealty.com/communities/arlington-community-information/ Adam

      Actually, I don’t agree with that blanket statement.

  • SomeGuy

    While I don’t think the author of this article delivered any brilliant insights, I commend him for having the stones to leave the comments open and foster discussion.

    That’s more than we can say for those lame BeerMonger/Wine Guy articles.

    • Burger

      Very True.

      Not being able to post on the Beermonger posts has turned into me not even opening the page. If I can’t comment why should I read what he thinks.

      • Have house, won’t sell.

        +1 for Arbour Realty for keeping the comments open so I can tell everyone that the Weenie Beenie caught fire this morning.

    • T.G.E.o.A

      +1

      Listing agents aren’t worth jack. It’s the buyers agent that earns their keep.

      • R. Griffon

        Disagree. Although I think it’s generally easier to be a listing agent, the agent’s input on listing price is absolutely critical, and has to be right the first time. Price to high and the property will stagnate, and eventually most likely bring slightly less than fair market. To low and you’ll leave money on the table. Listing agents with many years and transactions worth of experience may also be much better at sniffing out which buyers are serious vs. which ones may not have all their ducks in a row or might cause continued problems throughout the closing process. Their insight can be very helpful when considering multiple offers.

    • R. Griffon

      Agreed. But you can hardly blame them for sticking to milktoast narratives when they’re trying to drum up business. The fact is that nobody really knows what’ll happen to the ARL market in the years ahead, so they do well to stick to widely held truisms.

      I think his rental figure is a tad high as it represents the “luxury” end of the spectrum rather than true mid-range as stated, but that’s hardly a huge infraction.

  • Arlington Cat

    in Fairlington the home values have actually dropped a little from last year.

  • Arlington Cat

    And now for some practical and useful advice; if you a looking to put your house on the market, and your windows are more than seven years old, expect the potential buyer to ask for $3,000+ for upgrading/replacing the windows.

    Every home inspector will put down “replace windows” for windows that are seven years old or older. They will, and there is no way around it. Starting price around $3,000.00. Know this fact going into negotiation.

    A real estate professional sees this every week, and they will never tell you upfront because they get commission on the sale price, not the settlement price.

    • zzzzz

      Seven years?? The windows in my condo are 7 years old. Double-pane, tilt-in, working perfectly, absolutely nothing wrong with them, still under warranty. It would be crazy to think they need to be replaced.

      • Arlington Cat

        that’s what they do. upgraded or replaced.

    • JamesE

      Don’t forget granite counter-tops and stainless steel appliances!

    • Arlingtonian

      I wish the owner of my apartment building would replace our ancient, energy-wasting, drafty windows and balcony doors …

    • http://arbourrealty.com/communities/arlington-community-information/ Adam

      Unless the seals have gone bad or the window is cracked, you should not be replacing it as a result of a home inspection. Sounds like the buyer just wanted new windows at your expense. 99 times out of 100 I would recommend turning down that request.

  • Junior

    Bottom line is family homes in Arlington are a good buy — if you can afford it — because of the schools and location. The schools are competitive with the best in the area. And the proximity to DC is the absolute best of any suburb in Virginia. Take away either of those things, and you’d be foolish to buy at Arlington prices. But these two factors are the reason the market has held up as well as it has, and why I doubt you’ll see any significant drop in prices in at least the coming year or two.

    • CW

      Excellent, detailed economic analysis. A place is worth what people are willing to spend for it based upon its attributes. In other news, I like turtles.

      • DSS10

        +1

        Well done!

  • TuesdaysChild

    The problem with realtors is that they are never “real”.

    • http://arbourrealty.com/communities/arlington-community-information/ Adam

      I hope I can prove you wrong – at least about myself.

  • Joshinarl

    Very thoughtful and timely overview. They aren’t building any more land and with all of the jobs we will see here in the next couple yard prices and rents will go up as people want the convenience of Arlin tons urban feel and proximity to dc without paying 9.3% dc income tax. People who think Arlington is a “rip off” and are concerned about energy audits, realtors making a living and spewing negative comments about EVERY article here need to move out of their parents house and into the real world.

  • Jason S.

    Wow a real estate agent insisting now is the time to buy? That’s new. When has a real estate agent said it isn’t the time to buy?

    • http://arbourrealty.com/communities/arlington-community-information/ Adam

      Actually Jason, I didn’t say anything about it being a good time to buy. But, I get where your sarcasm is coming from. I too am tired of those blanket recommendations.

  • CW

    The trickle-up model is not sustainable in the steady state. At some point, something has to give. Salaries in the area are not growing at the same rate as property sales prices. Homes are by and large out of reach for even most white collar professionals. This reads like a Ponzi scheme and can best be described by the word “bubblicious”.

  • sue

    The time to buy was 2001. I missed that boat. I actually think I got a better value in 2009 then I would get today. My house would probably sell for about $150k more than I bought it for 3 years ago—which means I would no longer be able to afford my neighborhood.

    I didn’t use a realtor for either of my home purchases—in two highly competitive neighborhoods in DC and Arlington. Get a settlement attorney that can broker the deal and f*k wasted $ towards realtors commission. Saves buyer and seller a ton of $!

    • CW

      Moved here in 2009; thought prices were high then. Could have gone all in on a condo and made it work. Was risk averse and wanted to be conservative. Terrible, terrible decision.

      • JamesE

        I bought in 2007 right before the bubble! luckily my place hasn’t dropped. I have a “rare” 1 bdr with more than 800 sqft.

        • CW

          Yeah, that really is rare. Everything around here just keeps going right through the roof…we’ll see how long that keeps up, but it would take something really major to drop prices down to pre-2009 levels.

  • Me ke

    Adam thanks for the article…its informative and many ways reassuring….and brush off the folks who are simply here to be argumentative….it’s DC and everyone thinks they are in the know with insider info the got over dinner at the white house or Capitol hill

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