At the start of the year, we predicted that this year’s Washington, DC metro area real estate market would look a lot like 2018: stable contract activity, modest price appreciation, stable mortgage interest rates, and continuing low inventory. With over half of the year in the books, we were mostly right – with one glaring exception: the inventory of available homes.
Hyper-local market conditions vary in the region, and they always have. Yet there is typically some commonality to general trends – new contact activity may be very strong in one area and not quite as strong in another but they generally move in the same direction. The same holds true for days on the market, unit sales and other key market metrics. But since late last year, the number of homes on the market has shifted in a dramatic way.
At one end of the spectrum, the average month-end inventory so far this year in Washington, DC is up 12%, and in suburban Maryland, it’s almost flat, off just 2%.
It is a very different story in Virginia. Loudoun and Fairfax Counties have 15% fewer homes on the market. But that drop is nothing compared to what is happening in Arlington and Alexandria. Inventory has been cut in half compared to last year. Half.
The reason is simple: Amazon’s HQ2 announcement in November of last year. That big news shifted market dynamics almost overnight. Homeowners closest to the new headquarters location who might otherwise have been putting their homes on the market seem to have hit the pause button, holding off in anticipation – or hope – of much higher prices in the years ahead. But Amazon’s hiring impact hasn’t really begun, and contract activity is actually a little less in the eight months since their announcement than the equivalent period of the previous year.
So even with fairly flat contract activity, the dramatic drop in inventory has made supply in Arlington and Alexandria very tight. And the law of supply and demand is immutable, so prices must be soaring, right? Here’s our favorite recent headline from Curbed: “Amazon HQ2 ZIP Code Sees Doubling in Median List Price for Single-Family Homes“.
Folks, that’s simply playing games with statistics to create a sensational – and very misleading – impression. There were just five single-family homes on the market in that zip code so that doubling of prices is not reflective of the market. So what really is happening with prices?
We looked at the most relevant indicator: the repeat sale of the same home in the months before the announcement and since the announcement. And based on that admittedly small slice of the market, price appreciation is about 8%. That’s well above the 3% average in the rest of the region, but nothing like the headlines would suggest.
If you’d like to know more about the state of the real estate market or if we can help with any of your real estate needs please don’t hesitate to contact us.
Listed with Jackie Wynn, Leesburg Office
Welcome to Melrose Estate. Very special offering combining the ultimate in luxury and lifestyle, unparalleled indoor and outdoor living. 12k+ sq ft, stunning pool with fire features and rock-carved slides, pool house, sports complex with indoor basketball court, auto pitching range, fitness room… and right behind that, a full baseball field! The residence has 5 BR/5 full and 3 half baths. Pool house and sports complex each have a full bath. Fully automated smart home. Elevator. Private setting with Blue Ridge Mtn views, accessed by a tree and stone wall lined lane. Three sides stone. Welcoming front porch, wide back veranda, outdoor bar, and travertine patio for entertaining. Walk out basement has a game room, bar, theatre, and has rough-in space for a 2 lane bowling alley (or possible shooting range?) 45k generator and additional generator for the sports complex. Everything you would expect in a property of this caliber, AND MORE. This extraordinary property could not be built at this price.