This regularly scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. Please submit your questions to him via email for response in future columns. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!
Question: How did the Arlington condo market perform in 2021?
Answer: Happy New Year everybody! I hope you’re all enjoying the beautiful snow.
We’ve reached a clear market stabilization point in Arlington’s condo market after an up-and-down 2-3 years. The condo market surged from the 2nd half of 2018 through pre-COVID 2020, led by the announcement of Amazon HQ2 in November 2018, then was hit hard by COVID with many owners and investors flooding the market with supply while demand dropped. This downward pressure lasted from the Summer of 2020 through Q1 2021 and has since stabilized.
Note: The statements and data below are for apartment-style condos (buildings/shared entry) and does not include townhouse-style condos (direct entry) or senior living.
Amazon HQ2 and COVID Were (Mostly) Offsetting Forces
The pricing and demand data are such that the upward pressure from Amazon HQ2 and the downward pressure from COVID seem to have mostly offset each other resulting in modest-to-moderate annual price appreciation over the last 5+ years in the Arlington condo market.
Prices from the 2019 market surge have stuck, with the average price of a one-bedroom in 2021 being 1.5% higher than in 2019 and the average two-bedroom in 2021 being 5.6% higher than in 2019. For the entire Arlington condo market, the average cost of a condo in 2021 rose 2.9% over 2019 values.
If you remove new construction condo sales, the average one-bedroom in 2021 is just 1% higher than in 2019 and the average two-bedroom in 2021 is only .9% higher than in 2019. For the entire Arlington condo market, the average cost of a condo in 2021 rose just .3% over 2019 values.
The other interesting takeaway from the data below is that key demand metrics like average sold price to original asking price, percentage of homes selling within 10 days on market, and average days on market have all settled back to what we saw before the Amazon HQ2 surge (and had been for a while before that).
I think that we are positioned for moderate condo appreciation in the coming years, unless we undergo a significant restructuring of office usage. This is based on a few key points:
- Condo values have held on, and even appreciated slightly since 2019, despite the massive supply hitting the market over the last 18 months. Historically low interest rates and rising single-family/townhouse prices certainly helped drive that.
- Amazon HQ2 will continue hiring thousands/tens of thousands of people over the next decade and driving major commercial development in Arlington
- The pipeline for new condo development is practically non-existent and it takes years to fill that pipeline
- In many cases, apartment rents are now higher than they were pre-pandemic, making buying more attractive
- Wider gaps between condo prices and single-family/townhouse prices drive more buyers to condos, if they wish to remain in Arlington
Market Performance Similar Across All Price Points
Sometimes entire markets are led or held back by smaller sub-sections of the market and that gets lost when you take broad averages. I broke the Arlington condo market down into the lower 25%, middle 50%, and upper 25% of price points in each of the last three years to see if one section of the market might have an unnoticed influence on the overall numbers.
As it turns out, all three price cross-sections of the Arlington condo market have performed very similarly over the last three years, which I think is representative of a healthy market.
2021 Performance by Zip Code
For those interested in what the condo market in each Arlington zip code looks like, I pulled together average prices, demand metrics and property details for you in the table below.
The most notable takeaway is the high demand metrics for 22206 (Shirlington area) because most of the units in this data set located in 22206 live/feel more like a townhouse, despite not being direct-entry (the many direct-entry condos in 22206 were not included in this data set). This clearly shows the markets preference this year for anything resembling non-apartment living.
Next week I plan to do a similar market review of the single-family/detached market.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. 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, 4040 N Fairfax Dr #10C Arlington VA 22203. 703-390-9460.