It has been a year of the unexpected, unprecedented, and unpredictable. While it may be foolish of me to try, here are my predictions on what to expect in the Arlington real estate market in 2021:
One highlight of 2020 was the insanely low mortgage rates many buyers enjoyed, with some 30-year fixed mortgages hovering at just around two and a quarter percent with half a point. Those low rates were definitely a driver for the record number of home sales and high prices we saw in Arlington and nationwide (even in areas that were seeing a slump toward the end of 2019). When it comes to what to expect with mortgage rates, I defer to the experts. As we enter 2021, most experts say there will not be any changes to the low rates and that rates may push slightly past three percent by the end of the year. No drastic changes are expected.
The COVID-19 pandemic accelerated the work-from-home trend, which is having a direct impact on the priorities of today’s home buyer. Where proximity to the workplace and the city have been paramount in recent years, now the majority of buyers are more concerned with having enough space to have a home office (or two), a dedicated study space, and a dedicated recreation space (home gym, outdoor garden, pool). Great WiFi for Zoom calls is also a plus! As many businesses have adopted more permanent or at least flexible teleworking policies, buyers are more open to purchasing homes further and further away from their workplace to get what they want at a better price. For example, I had clients recently bid on a home in Bristow (about an hour away from Arlington), where there were 51 competing offers.
2020 saw a near 30 percent surge in the number of condos available for sale when compared to 2019, but the number of closed sales was down by 5.4 percent. The desire for the features discussed above, the fear of communal spaces, and the trend of many recent college graduates (not to mention students) choosing to ride out COVID at their parents’ home have all contributed to this increase in supply. I have sold condos recently in a couple of very popular communities. I found that the two-bedroom condo with a den that I sold went much more quickly than the standard two-bedroom and one-bedroom condos (with no den) that I had on the market. Despite this, the median condo sales price is still up by 7.3 percent when compared to 2019. I expect condo sales to remain challenging for the first half of 2021. When vaccines for the coronavirus become more widely available to the public and we see an economic rebound, condo sales will make up for lost time.
After a near 20 percent drop in the number of available homes for sale in Arlington over the course of 2019, you would think that the COVID pandemic would have caused a steeper decline in inventory. Yet, even in the midst of all the uncertainty that 2020 brought with it, inventory was up almost 20 percent in Arlington. A closer look at the numbers reveals that increase is due in large part to a surge in the number of condos for sale. The inventory of single-family homes was only up by 3.7 percent. With the majority of buyers on the hunt for single family homes (not condos), this modest increase has not had a significant impact on demand. I expect the trend of increasing inventory will continue as some sellers who were holding back finally bring their homes to market. But the volume of buyers will also increase. We should expect a very active spring and summer market as a result.
As the inventory grows, come springtime, I expect that the rate of housing price increases will slow from the current breakneck pace. With more inventory and some buyers opting for homes further out, buyers in the Arlington market will have more choice and the competition for homes will be more spread out among the different options. But don’t get me wrong, there will still be plenty of competition to drive prices upward. Instead of 15-20 people competing for one house, we might see that group broken up among a few different houses.
2020 challenged me to innovate like never before to meet the needs of my clients. If you are thinking of buying or selling in 2021, I would love to help you strategize to get the best results.
*Market data sourced from Market Stats by ShowingTime, which comes directly from the Multiple Listing Service (MLS), as of December 29, 2020.
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