Ask Eli

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: I’ve noticed that the market has slowed down quite a bit the last few months. Is that a sign that the market is finally turning?

Answer: I hope everybody had a wonderful Thanksgiving. Last week, I asked everybody to vote on whether you should start eating your Thanksgiving meal before 5 p.m. or 5 p.m. or later. With 825 total votes, 77% of you said the meal should start before 5 p.m. and 23% voted for 5 p.m. or later. We aimed to start our meal at 4 p.m., but ended up starting at 5 p.m.

Will The Slow Market Continue into 2025?

Like clockwork, the second half of the year is slower than the first half (except when COVID flipped 2020 upside down) and it gets especially slow in the 4th quarter as focus shifts to holidays, family/friend time, and travel. This period of seasonal slowness consistently succeeds in lulling the market to sleep, resulting in predictions that whatever economic/housing headwinds exist at the time (high rates, rattled economy, affordability crisis, etc) will result in a down housing market the following year.

These predictions are consistently wrong, and the market usually proves that within the first few weeks of the new year.

The Data Says Prepare for a Rapid Increase in Demand

The data in the chart below is collected from Arlington sales going back to 2019, sans 2020 data and new construction. It shows market performance based on the week that properties go under contract based on the percentage of properties selling over the original ask, percentage of properties selling at or over the original ask, and the percentage of properties selling within ten days on market (my preferred measure of market speed).

• The highlight of the chart is how rapidly the market shifts in January, relative to the previous 1-2 months. By the third week of January, the market is moving faster than it has in over three months and by the fourth week of the year, the market is experiencing stronger performance than it has in nearly every week over the past six months.
• Only 27% of properties that go under contract in the second half of the year are over the asking price, but from the fourth week of January through May, an average of 45% of homes sell for over the asking price.
• For buyers in the market, it’s important to also prepare for just how quickly homes will start selling. In the last seven weeks of the year, only 33% of homes were going under contract in the first ten days, but that jumps to over 46% by the third week of January and by early February over 50% of homes sell within the first ten days on market and the pace hovers around 60%-70% through May.

These percentages will vary based on the market conditions of a given year, but the important takeaway is how quickly demand shifts in the new year relative to the end of the prior year. As a reminder, Q4 ’22 to Q1 ’23, a period many predicted would result in a continuation of a slow/down market, delivered us the most significant whiplash effect through a new calendar year we have seen.

You can see a similar shift in market conditions in this chart from Altos Research showing the percentage of properties in Arlington on market that have had a price decrease. The steep drops you see start when the calendar turns to January.

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 #10C Arlington VA 22203. (703) 390-9460. 

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: What are you currently seeing in the Northern Virginia housing market?

Answer: Before I jump into some trend comparisons of the Northern Virginia and Arlington housing markets, I want to remind you that it’s normal for the market to slow down this time of year and it’s easy to be lulled into thinking the seasonal slowdown is indicative of a larger market turn, but like clockwork the market usually snaps back into form by mid/late January (see this article for details).

With that said, this week I’d like to look at some multi-month trends that I’m watching in Northern Virginia and compare the overall Northern Virginia market to the much smaller Arlington market.

Northern Virginia Months of Supply Trending Up

Months of Supply (MoS) is a great measure of supply and demand. Lower MoS means a stronger market for sellers. Northern Virginia and Arlington had similar rock-bottom MoS in 2022, particularly for detached homes, but after interest rates spiked, Arlington quickly hit 1.5-2 MoS and has mostly stabilized in that range.

Northern Virginia has taken a more gradual path to increasing MoS, but has seen more rapid increases to MoS in recent months, which means buyers have gotten modest relief. Arlington and Northern Virginia are now seeing similar MoS levels, but Northern Virginia is trending up at a faster rate and I’ll be watching closely in early 2025 to see if Northern Virginia MoS starts to exceed Arlington’s (I think it will).

Supply Up in Northern Virginia, Down in Arlington

Supply (homes listed for sale) is up for seven straight months in Northern Virginia, which is slightly good news for buyers, but still a long way to go before we get back to pre-pandemic levels (currently about half of where we were).

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Thank you to all who have served and to their families who have sacrificed or lost loved ones for our freedom.

The Eli Residential Group will be donating $1 for each vote on the three Veterans charities in the poll below (up to $1,500). So vote and share!

One vote = $1 donation.

• Fisher House Foundation
• K9s For Warriors
• Wounded Warrior Project

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 #10C Arlington VA 22203. (703) 390-9460. 

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: We are looking forward to buying a home next year. Do you have any recommendations on how we should start the home buying process?

Answer: If you Google “home buyer tips” or “what to know before buying a home” you’ll find plenty of advice on the topic, so I’ll include some suggestions I don’t usually see online and put my own spin on some of the more common advice.

Length of Ownership

How long you expect to live in your home is one of the most important factors in defining what you prioritize and how you use your budget. You should focus on the following:

1. Likely length of ownership
2. Difference in criteria for a 3-5 year house vs a 10-12+ year house
3. Difference in budget requirements for a 3-5 year house vs a 10-12+ year house

Appreciation is not guaranteed and difficult to predict, but the value of longer ownership periods is undisputed. One way longer ownership adds value is the potential for eliminating one or more real estate transactions over your lifetime, thus the associated costs (fees, taxes, moving expenses, new furniture, etc.) and stress that comes with moving.

If you have an opportunity to significantly increase your length of ownership by stretching your budget, you generally should. On the other hand, if your budget or future (e.g. job will move you in a few years) restrict you to housing that’s likely to be suitable for just 3-4 years, it’s generally better to stay under budget.

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: Should Virginia pass a law that gives buyers a non-negotiable due diligence period?

Answer: The last few years have ushered in complex and difficult debates locally and nationally about housing and what the role of federal, state, and local government should be in private housing. Nationally, we are dealing with an affordability crisis and locally we’ve debated Missing Middle/EHO.

To me, the most critical and interesting questions center around what government’s role should be in private housing and what, if any, responsibility does government have to homebuyers and sellers. That applies to a wide range of housing-related issues including but certainly not limited to taxation, zoning, insurance, Realtor commissions, and affordability.

Don’t worry, I don’t have a death wish and am not about to open a conversation about government, free markets, and housing affordability a week before the election. This is (hopefully) a more subdued topic.

Buyers Are Foregoing All/Most Due Diligence

One of the unfortunate results of our highly competitive housing market over the last 5+ years is the amount of protection and due diligence buyers have given up purchasing a home. In many home purchases, especially single-family detached, buyers are foregoing inspections and financing/appraisal contingencies to compete. It often shocks me on my listings how many buyers choose not to do a home inspection, even in scenarios where a pre-inspection (inspection conducted prior to making an offer) is possible.

Buyers accepting the risk (sometimes significant risk) of no contingencies (contractual protections) is somewhat of a catch 22 — they do it because other buyers they’re competing against are doing it and they in turn become the buyers that cause other buyers to make similar decisions. When the market is at its most competitive (generally the first half of the year), I would estimate that at least 2/3 of homes (probably more) in Northern Virginia that go under contract within the first week on market (most homes) do not have any contingencies and many of those buyers never do a home inspection.

Should Due Diligence Laws Be Passed?

Until we move into a less competitive market, which seems a long way off due to systemic supply issues and robust demand in Northern Virginia/D.C. Metro, I don’t see this pattern of homebuyer risk changing in a meaningful way.

So, I wonder out loud (and via the poll below) — should Virginia pass a law that gives every homebuyer a non-negotiable due diligence period after they’re under contract? They can use this time, at their option/cost, to conduct a home inspection, confirm a property is insurable, and more.

To provide comfort to sellers and maintain an element of the free market negotiations to this, a required due diligence period can be coupled with a non-refundable due diligence deposit if a buyer voids within this period. In a competitive market, buyers can increase this deposit to increase the value/safety of their offer. For example, a highly motivated buyer can offer a $10,000 non-refundable deposit if they void.

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: Are buyers now required to pay the buyer’s agent commission?

Answer: Most people have heard at least a little about the sweeping, nationwide changes to how compensation is offered/paid to buyer agents in residential real estate transactions that took effect in mid-August. If you’d like a catch-up, you can read my article on it from July.

Are Buyers Required to Pay Agent Commission?

I have heard a lot of confusion over the last few months on what these changes actually mean for buyers and sellers. Many came away from reading/hearing whatever news they follow, understanding that buyers are now required to pay buyer agent compensation, but that is not accurate.

Here’s what you need to understand: Buyers are responsible for their agent’s compensation, but they are not required to pay it out of pocket.

What Does it Mean for Buyers to Be Responsible?

Prior to the new rules/laws, buyers didn’t hold much responsibility when it came to their agent’s compensation because in most cases (like 99% +) buyer agent commission was set when the seller signed a listing agreement with their agent and became enforceable when the home was entered into the MLS for mass marketing. So most buyers thought little about their agent’s compensation and rarely had to come out of pocket for it (the DOJ hated this).

The new rules require that the Representation Agreement between a buyer and their agent include a clear and specific amount of compensation the agent will earn. In other words, it must be a specific percentage or dollar amount, it cannot be vague (e.g. “as negotiated with the seller”) or broad (X%-Y%). This means that, through the Representation Agreement, buyers are responsible for ensuring their agent is paid the agreed-upon amount.

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: How much should I wait for rates to drop until I refinance my loan?

Answer: Mortgage rates have fallen (and risen) over the past six months. A few weeks ago rates were down by over 1% from earlier this year and at 18-month lows, which meant anybody who took on a mortgage recently should be thinking about refinancing. Rates have come back up over the past couple of weeks, but I wouldn’t be surprised to see them sink again in the coming months.

I reached out to the loan officer, Jake Ryon at First Home Mortgage to ask about the process he uses to help clients decide whether it’s the right time to refinance.

What Are Your Goals?

The first step is understanding what you want to achieve. Ask yourself:

• Do you want to lower your monthly payments?
• Do you want to shorten or extend your loan term (e.g. 30-year to 15-year)?
• Do you want to take cash out for home improvements or other financial goals?

Since most people refinance to lower their monthly payments, I will focus mostly on that decision.

How Much Does a Refi Cost?

The transactional cost of refinancing varies, but Jake advises estimating 0.5%-0.75% of the loan amount to refi in Northern Virginia (usually on the higher end of the range), but these costs can vary based on several factors and vary by state/city. The transactional costs include things like:

• Lender fees
• Title fees
• State taxes/fees (e.g. recording fee, transfer tax)
• Third-party fees (e.g. HOA questionnaire, appraisal)

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This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at Eli@EliResidential.com.

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

Question: I have heard that inventory is building and the market is starting to favor buyers. Is that accurate?

Answer: I have preached for years the importance of caution and care when applying real estate data to your own decision-making. National real estate data is rarely useful, regional real estate data is sometimes useful, and even local data can be full of misleading conclusions.

It’s quite likely you’ve started to hear news and see data showing significant inventory build-up and markets shifting to favor buyers. We have seen modest market shifts in Northern Virginia, but nothing like what other regions of the country are experiencing, which is the source of most of the newsworthy reports you may see.

I recently came across this fantastic chart illustrating how housing market conditions are in different regions of the country. The bigger the green bar, the more favorable the market is for sellers, the smaller it is, the more favorable the market is for buyers.

Inventory Levels and Demand Drive Price Momentum

The green bars above illustrate demand levels against inventory and provides a good indication of how prices might react in the coming months/year, the charts below show how inventory levels have changed by state over the past 12 months and five years (pre-pandemic levels) and are also a good indicator of future price movement.

• Sun Belt and Mountain West markets are seeing a faster return to pre-pandemic inventory levels
• Many of the markets seeing the biggest buyer-favorable swings (more inventory) saw greater home price growth during the pandemic housing boom
• Northeast and Midwest markets have lower levels of homebuilding (new supply)

It’s Good to be in the DMV

Attom Data released a report on Sept. 6th analyzing 589 counties to determine the risk of a housing downturn based on:

• % of homes facing possible foreclosure
• underwater mortgages
• % of income to buy
• median sales price
• local unemployment rates

The metropolitan areas around New York City, NY, Chicago, IL, as well as broad stretches of California, the Southwest, and Florida are considered most vulnerable to a housing downturn.

Virginia had eight of the least-at-risk jurisdictions, including Arlington County, City of Alexandria, Fairfax County and Loudoun County. This is the story of real estate ownership in the greater D.C. Metro area — we may lagged other regions in appreciation during the pandemic boom, but we can sleep comfortably now as many markets are facing a risky future.

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 #10C Arlington VA 22203. (703) 390-9460.