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 Eli Residential channel. Enjoy!
Question: How did the Arlington single-family detached housing market perform in 2023?
Answer: 2023 was a great year for Econ101 lessons and showed just how true the pricing relationship is with supply and demand. Despite most buyers not wanting anything to do with buying a home given high interest rates and limited choices, home prices experienced modest gains due to a significant drop in homes being listed for sale. There were about 18% fewer single-family homes (SFH) listed for sale in Arlington in 2023 compared to 2022 and roughly 40% fewer single-family homes listed for sale compared to 2021, which led to another strong and competitive year for the Arlington single-family housing market in 2023.
The data below looks at Arlington’s single-family detached home market last year and trends over the past five years. Most real estate data sets look at numbers based on the year a home sold/settled, but I prefer to look at data based on when a home went under contract because it gives a more accurate reflection of what was happening in the market place at the time the deal was agreed to. For example, many new builds go under contract months to a year or more before they close. I also use “Net Sold” for prices, the sold price less any seller credits, for a more accurate representation of the price paid/received.
Another Year of Strong Growth for Arlington SFH
It was only 2018 when the average SFH in Arlington cracked the $1M mark and after the Amazon HQ2 announcement, the COVID run-up, and overall strong economic conditions the average SFH in Arlington has surpassed $1.35M. Competition for a home in Arlington remains incredibly high and early signs in the 2024 market show even more upward pressure in the housing market.
- The average and median price of a SFH in Arlington increased 3.4% and 5.9%, respectively, in 2023, and increased 23.1% and 28.2%, respectively, over the past five years
- The average buyer paid .6% less than the original asking price of a home. If you purchased a home within the first ten days of it being listed for sale, you paid an average of 2.7% over the original asking price, 60% of homes sold within ten days on market.
- A remarkable 42% of homes sold for above the original asking price, which is consistent with what we’ve seen since 2020. 56% of homes sold for at or above the original asking price.
- If you remove new construction homes from the data set, the average price for a SFH in Arlington falls by about $106,000 to just under $1.25M.
- For the first time in years, the percentage of sales below $800k and above $2M were relatively unchanged and the most common price range for an Arlington SFH is $800k-$1.2M
- Finding a SFH in Arlington for $800k or less is rare, with just 11% of homes selling in that range (same as 2022) and quite a few of those sales are going to builders/investors for redevelopment
22203 Gets Hot, 22201 Extends Lead
Let’s drill down into each zip code to see how different parts of the County performed. Note that 22209 doesn’t have enough SFH sales for this exercise and data in 22206 and 22213 should be taken with a grain of salt because they have so few sales, which leads to larger swings in their market data each year.
- 22203 was the hottest zip code in 2023 with the highest average purchase price over original asking price and a remarkable 11.8% annual appreciation (well, technically 22206 had a 40.7% increase but there’s not enough sales for accurate trend analysis)
- 22201 extended its lead as the most expensive zip code with an average price more than $200k above the second most expensive zip code (22207) and came in second in YoY appreciation at 8.2%. Will the average price for a home in 22201 cross the $2M in 2026?
- Over the past five years, 22201 has benefitted from the highest average price appreciation at 32.4% while the rest of the zip codes have appreciated ~21%-28% in that period. Since prices in 22202 jumped in 2019, just after the Amazon HQ2 announcement (Nov. 2018), that zip code has seen the lowest five-year appreciation in the County.
- 22205, a perennial leader in average price growth prior to 2023, was the most competitive of all zip codes with 72% of homes selling within ten days of being listed and nearly two-thirds going for at or above the original asking price
New Home Prices Down 4%… But Really?
The data indicates that price of new builds fell by almost 4% last year, and it would make sense given high interest rates. However, that was not what I saw happening in the new build market and I checked with a handful of Arlington’s top builders to confirm that was not their experience in 2023 either. So what do we make of this data?
It’s true that the average sale price of new homes fell by almost 4%, but simultaneously selling for as much or more than they did in 2022 (generally speaking). The reason is a higher volume of less expensive homes selling in 2023 compared to 2022, thus pushing average and median prices down for the market overall.
First, the average lot size of new builds last year dropped by just over 1,300 SqFt (a 14% drop) and lot size plays a big role in how much new homes sell for. Second, more than twice as many new builds sold in the two least expensive zip codes (22204 and 22206) in 2023 compared to 2022.
This is a great example of how difficult real estate data can be to work with because it’s easy to end up with false trends/conclusions if you’re not also familiar with the local market or taking time to look deeper into the data sets.
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 Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10CA