Arlington, VA Real Estate Market Update, May 2021
So how is the real estate market in Arlington, VA?
Single family home market is still going crazy, while condo market is OK. Townhomes are somewhere in the middle.
Arlington real estate, just like any real estate follows the law of supply and demand. We calculate the demand by the “months of inventory”. (If not more new listings come on the market how long it would take to sell the current inventory?) In Arlington it takes about 2.5 months if inventory for the market to be neutral.
Take a look at this chart – BLUE is overall market, RED is single family homes and YELLOW is condos. (This is a chart for the last 3 years – the condo market inventory dipped dramatically after Amazon’s announcement) Overall we are just over 2 months of inventory, but that’s not a very accurate picture. Single family homes inventory is very low – just over 1 month and is still way under 2 months – which means the prices will continue to rise, as there are not enough homes available. The condo market has stabilized after we had a very large inventory increase in the fall of 2020. The prices for condos are not rising – good ones sell quickly and little above the price, but condos that are overpriced or in average condition are sitting around.
When will this single family home madness stop? I don’t know. Maybe when interest rates go up some more? Which is predicted to keep going up very slowly. There is also a question of affordability. Current value increases are certainly unsustainable – buyers have their ceilings. And if the interest rates go up by 1%, buyers will be able to afford 10% less in price. So we shall see. My head is spinning seeing multiple homes selling for more than 100k above list price.
Here is a chart showing list price/sold price ratios.
On average single family homes are selling 2% over list price. Condo are selling right at sales price.
How quickly is real estate selling in Arlington, VA?
Average days on the market – 6 days for single family homes, 10 days for condos. And that is FAST!
Arlington, VA housing inventory
Everyone keeps complaining about the lack of inventory. Well, if we look back a couple of years – we have TONS of inventory in Arlington in comparison. We are close to 2018 levels. We have a ton more buyers though. Why did you all wait to buy till 2021 lol? It is really tough to be a single family home buyer these days – in order to get a decent house you have to waive EVERY CONTINGENCY – inspection, appraisal, financing and potentially give the seller free rent-back for as long as they want (your lender will only let you 2 months). I feel you. It’s painful. And you better plan to live in this home for a long time, because the market will certainly change.
So what’s next?
I think summer vacation plans will slow things down a little. I hope vaccinations will make city life a bit more appealing and the condo market will become more attractive again. Rising interest rates will slow things down slowly.
Should you buy or sell in Arlington, VA?
If you are thinking about selling your single family home – NOW is a great time. If you are in the market to buy one – now might be a good time due to low interest rates, but if you have lots of cash and don’t care about the interest rates so much – you might want to wait till this madness is over. Even if the market slows down – I don’t anticipate any huge reductions in prices in Arlington. I certainly think it’s a great time to buy a condo right now! If you’d like to talk about your situation and would make sense – contact me and we can talk.