Ask Eli: The Real Story About 22202 Property Values (Amazon Zip Code), Part 2

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. Enjoy!

Question: I have read articles about the 22202 zip code suggesting everything from extreme appreciation to homes now selling for pre-Amazon prices. Can you shed some light on what’s actually happening in that market?

Answer: A few weeks ago, I wrote part one, focusing on the performance of the 22202 (Amazon Zip Code) condo market so this week we’ll take a look at how the detached single-family market performed in the neighborhoods bordering Amazon HQ2.

One of the issues I mention in Part 1 is how much misinformation has been published elsewhere about price appreciation in 22202 and the Arlington/Alexandria markets.

This two-part column is one of my attempts to provide an accurate picture about what’s actually happening in our real estate market. The key takeaway is that the market performed very well (if you own, not if you’re a hopeful buyer) following the Amazon HQ2 announcement, but prices haven’t skyrocketed the way many articles would lead you to believe.

Market Make-up

The 22202 market offers a diverse supply of housing. This year, condos have sold from as little as $195,000 for a 500 sq. ft. studio to $1,250,000 for a 2,900 sq. ft. 3 BR/3 BA penthouse. The least expensive detached home sold for $630,000 to be torn down and the most expensive a 6 BR/4.5 BA for $1,600,000.

Homes in the area tend to be pretty old with most detached homes being built prior to the 1960s and only one condo building has delivered since 1990. Of the 139 homes to sell in 2019, 78 were in condo buildings, 50 were detached homes, and 11 were townhouses.

22202 Detached Single-Family Performance

The tables below represent sales in 2018 and 2019 split between those that went under contract before and after Amazon’s HQ2 announcement on November 13, 2018:

Like elsewhere in Arlington and the 22202 condo market, inventory levels took a big hit in 2019, dropping 33% from 75 sales in 2018 to 50 sales in 2019. Sales volume had ranged consistently between 69 and 76 sales since 2015.

The decline in sales certainly was not due to lack of demand, rather fewer properties hitting the market. This is evident from the sharp drop in average days on market (down 63%) and sharp increase in the average sold price to original asking price ratio (up 3%). In fact, the detached home market was so competitive that the average buyer paid over asking price.

Detached home prices in 22202 increased by an average of 9.2%, from $911k to $996k, and the median value increased by 8.5%, from $876k to $950k. Detached homes in the area vary so much from sale to sale that you can’t take the average or median price growth and apply that level of appreciation to all individual homes. When I dug into individual comparable sales pre- and post-Amazon announcement, I found that homes below ~$1M appreciated noticeably more than those above $1M, by about 12-15% and 5-8%, respectively.

Here are a couple of tables for those of you who want to get really far into the data. The first shows how the lower, middle and upper quartiles changed between 2018 and 2019. The second shows how sales were distributed between different prices ranges.

22202 Tear-Down Sales

I also looked at how the Amazon announcement impacted the cost of homes being torn down (for new construction) and found that the average cost of buying a tear-down increased by 13.7% or 16.2%, depending on which data point you use. Note: I limited the data set to homes sitting on 5,000-10,000 sq. ft. lots and not all tear-down sales are entered into the MLS.

I hope anybody living in or hoping to buy into the 22202 zip finds this data useful and the rest of you find it interesting! I’m going to start working on my 2019 Arlington housing market review and hope to have that published in the next few weeks.

If you ever want to meet/talk about the market or your plans to buy, sell, or invest in the D.C. area, don’t hesitate to reach out to me at [email protected].