Ask Eli

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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: We are planning to put our home on the market this spring and seeking advice on home improvement projects to maximize our sale. What guidance do you have on home improvement projects with the best resale value?

Answer: The decisions you make about money you do or do not spend improving your home prior to a sale can influence your bottom line more than most other decisions you make during the sale process. They’re also the decisions you’re most in control of, so take your time and plan carefully.

Most Remodeling Projects Lose $$$ on Resale

Remodeling.com publishes an annual report showing the resale return of specific remodeling jobs, based on region of the country, and the 2022 report was published earlier this month. Unfortunately, I can’t share the D.C.-area report because of copyright issues, but it’s worth visiting the link yourself (they require some basic info).

The findings of their report show that the majority of projects (e.g. bathrooms/kitchen remodel, new roof/windows/siding), done individually, return just 50-80% of the cost. I have seen another study by Zillow that shows similar projections.

There are, of course, always exceptions to this guidance. For example, if most of your home has been updated except for one room/bathroom, you will probably get a much better return making modest improvements to the lagging space to bring it up to par with the rest of the home.

Another example is improving something that is in exceptionally bad condition such as replacing old, rotting single-pane windows that don’t function and have air leaks; you’ll probably earn yourself close to or above 100% return on this work rather than the ~65% determined by the Remodeling.com study.

So when considering larger scale home improvement projects — kitchen renovation, new roof, porch addition — it’s rarely a good idea to do this work strictly for resale purposes, but only if you’re going to realize personal value from it.

Should You Ever Spend on Listing Prep?

The study mentioned above is in reference to more expensive home improvement projects and does not include the most common (and profitable) work done for listing prep like painting, power washing, cleaning, landscaping, and flooring.

Prior to most sales, every homeowner should make a list of possible repairs and improvements and gather pricing for all worthy projects. If you plan to hire a real estate agent for your sale, I highly recommend doing this with your agent, who should have a good understanding of profitable vs unprofitable projects for your market/property type and have a team of contractors available to support the work.

They should have a deep enough knowledge of buyer preferences, your sub-market, and project cost to prepare a set of listing prep recommendations based on your home and budget, rather than a generalized one-size-fits-all plan.

After you prepare a full list of potential improvements, you can bucket them in tiers and analyze each tier for cost, project timeline, and impact on the expected resale value to determine which improvements make the most sense. These tiers generally fall into three categories:

• Clean-out, Clean-up: This focuses on the low cost, high return items to make a home more presentable such as painting, deep cleaning, repairs, light landscaping, etc
• Bring up to par: Investing in one/some more expensive projects to bring them up to par with the rest of the home. For example, improving a dated bathroom if the rest of the home is updated so that the one bathroom doesn’t drag down the value of the other improvements.
• Remodel/Homeowner Flip: Similar to what an investor might do to a dated home in an expensive neighborhood, a homeowner might choose to make a major investment into updates and benefit from a significant profit

Consider All Costs

The cost of doing improvements goes beyond the cost of the labor and materials. Don’t forget to consider things like:

• Your time managing the work (note, a real estate agent will generally handle project management)
• If you’ll live in the home during work, the inconvenience of having work done while you’re there
• If you’ll move out before starting work, the carrying cost while work is being done
• Risk of something going wrong during the work (applies more to larger projects)
• Contingency budget for unexpected work that may come up during the project(s)

Always Seek 100%+ ROI

There’s no doubt that remodeling your kitchen will generate a higher sale price, but it’s rarely advisable to invest money into improvements if you won’t return more than 100% on the investment. Herein lies the challenge and strategy in planning your improvements. Understanding the profile of your likely buyers and what they value, plus other factors like market conditions and property type, is crucial to making investments that generate profit, not just a higher price.

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 Ask Eli, Live With Jean playlist.

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 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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Eli Residential Group is hosting our family-friendly Fall Fest Client event at The Lot in Clarendon on Sunday, October 23 and we would like to extend an invitation to ARLnow/Ask Eli readers to join us for the last hour, from 2-3 p.m.

You are welcome to enjoy food and drink at The Lot after 3 p.m. when it opens to the public.

The event will include:

• Food
• Drinks
• Live music from The Dad Guys
• Games and activities for kids and adults

If you can join, please RSVP here by Saturday, October 15 to receive a ticket for a complimentary beer or wine at the event.

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 Ask Eli, Live With Jean playlist.

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 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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: We are finalizing our 2023 condo budget. Do you have any advice for ways to save money?

Answer: As a former Condo Board Treasurer, I feel the pain that this time of year brings, so I’m happy to offer some advice that helped me finding savings while I oversaw the budget and has helped other Associations do the same… review your Master Insurance Policy.

I know, it’s not the most exciting answer, but your insurance policy is likely a top three expense on every year and if you haven’t reviewed it lately, there’s a good chance you can cut the cost by 5% or more and probably improve your coverage at the same time.

I’m not an expert in insurance so, I asked Andrew Schlaffer, President of ACO Insurance to provide some details on what Boards should look for when they do a review of their Master Policy. If you’d like to discuss a review with Andrew directly, you can reach him at 703-595-9760 or [email protected]. Take it away Andrew…

Hardening Markets, Increasing Premiums, Decreases in Coverage

The condominium insurance marketplace is facing challenges that will impact homeowners in 2022 and beyond. Water damage claims are still among the loss leaders impacting Unit Owners, along with fire damage and wind/hail claims. The DMV is home to many aging condo buildings that continue to struggle with mitigating water damage losses and their impact on insurance premiums.

As water damage claims continue to rise and property damage costs increase, many insurance carriers are beginning to make changes to their coverage offerings that may increase your risk exposure. A few examples of these coverage changes include Increased deductibles, per unit water damage deductibles, removing coverage for Sewer or Drain Backup and Wind-Driven Rain.

In general, condominium property rate increases in the DMV have been significant and unpredictable. Much of the pricing impact can depend heavily upon carrier underwriting discretion which highlights the importance of your insurance professional specializing in this space. It has not been unheard of for Master Insurance policies to receive between a 7% to 15% property rate increase in 2022. For struggling communities, these rates are much higher.

The umbrella/excess liability carrier marketplace has also faced tremendous disruptions. There are several factors driving these rate increases including but not limited to: COVID-19 impacts, years of underpricing, reinsurance rate increases, and the rise of nuclear verdicts (claims over $10MM).

Additionally, there have been several specialty real estate programs who no longer offer umbrella/excess liability options for the habitational industry which has put a lot of strain on remaining carrier markets to fulfill the increase in demand. Many communities can expect umbrella/excess liability rates to increase between 10% to 25% this year. 

Pillars of Insurance Reviews

Condo insurance reviews require a holistic approach, so it’s important to break the cost into a few distinct categories: insurance premium, deductible expense, and out-of-pocket costs. To effectively accomplish long-term savings, all three of these categories need to be considered and addressed with a qualified insurance professional.

Adjust Coverage Responsibly to Save on Premium

Premium is certainly a factor to consider during the insurance selection process; however, available insurance products differ significantly. Coverages and services should be very carefully analyzed and compared. While omitting various coverages will save premium dollars, it might also result in substantially increased costs to the Association for out-of-pocket expenses related to uncovered claims.

It is critical to work with a professional who understands local insurance needs and can adjust your insurance program in a way that maximizes premium savings while maintaining adequate insurance coverage. Some coverages may be required by statute and/or Association documents, so cutting required coverage exposes the Board to unwanted risk.

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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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: Should I consider selling my home off-market?

Answer: The correct question is not whether you can buy/sell a home yourself (yes, you definitely can), rather what are the chances that you net a better result doing so. Last year, Bright MLS released a significant study comparing the results of on and off market sales and found homes sold “on-market” through the Bright MLS platform (link to article explaining what Bright MLS is) sold for 16.98% more than those sold off-market. It was an excellent first attempt at objectively comparing sales data between the two approaches, but there were some flaws in the methodology that received pushback.

2022 Study is Much Improved

In August, Bright MLS released a new, much improved study on the same topic with significantly more data and better methodology. They expanded the data set from 443,000 sales from 2019-2020 to 840,000 sales from 2019-Q1 2022, which means we added data from the peak real estate market of 2021-early 2022. They improved the methodology in several ways such as controlling for flips, new construction, sales between family members, and distressed sales and also significantly improved how they compared prices by analyzing property and neighborhood characteristics, not just by median prices.

On-Market Sales Sold for 13% More, Even more in D.C. Area

The study found that from 2019-Q1 2022, homes sold through the Bright MLS platform in the Mid-Atlantic sold for 13% more than those sold off-market and the returns were even greater when the market peaked in 2021 (14.8%) and Q1 2022 (19.7%). The D.C. area market saw even higher returns for on-market sales than the Mid-Atlantic (see chart below).

I think that one of the most important takeaways from this study is how significant the increase in returns were for on-market vs off-market sales when the market was at its peak from 2021-Q1 2022. There’s a clear trend that as the market became more favorable for sellers, and it became easier to sell a home than ever before, the difference in returns between on-market sales and do-it-yourself sales became significantly greater.

Office-Exclusives Also Struggle vs On-Market

The study also looked at office-exclusive sales whereby a property is marketed by the listing brokerage, exclusively to agents within the brokerage. As one might expect, the limited access to buyers through this approach also results in weaker performance.

In some cases, a seller may prefer the privacy of an office-exclusive to the returns of an on-market sale, but that trade-off must be fully understood.

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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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

I would love to hear more from you in comments or by email ([email protected]) about your opinions on the availability of good real estate content — national or local market information, investing, best practices/how-to, etc.

Whether it’s content you’d like to see here in my column or content you wish you could access from other sources, I’d love to hear!

No matter how informed you are on the real estate market, how happy are you with the information/news you do receive?

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 Ask Eli, Live With Jean playlist.

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 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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: I have recently seen two properties from Open Door listed for less than what they paid for it. Is that common for them or are these outliers?

Answer:

What is Algorithm-based Real Estate?

Algorithm-based buying and selling, also known as iBuying (2019 article here for more details), is when large companies/investors use algorithms (e.g. Zestimates) to assess a home’s value, purchase it (cash), and then resell it for a (hopeful) profit. These are arms-length transactions using corporate-level strategies rather than local ones.

The idea is that there are enough homeowners who value the ease and flexibility offered by iBuyers (cash, quick closings, no showings, etc) over getting a higher price that there’s billions in business for these companies (Open Door is currently valued over $3B). The acquisition and resale values of homes are determined by algorithms that these companies believe give them a clear picture of local markets across the country and competitive advantage at scale.

Zillow lost about $1B over 3.5 years using their pricing algorithms and shut down their iBuying business last year (article here for more details). After Zillow shuttered their iBuying business, it left Open Door as the biggest player in the industry. What makes them different than Zillow is that iBuying is their core business; for Zillow it was a supplemental revenue stream that risked hurting their core business.

I think the business in fundamentally flawed for many reasons, one of them being the massive disadvantages iBuyers are at during shifting market conditions. In strong markets, sellers can achieve the same or similar terms from everyday buyers and iBuyers are competing with everyday buyers on a house they haven’t seen, in a market they don’t know. In a weakening market (like we’re in now), properties they bought months earlier may be worth the same or less than they are when they’re being resold, so profits are smaller and losses much more common.

The greater D.C. Metro area is a relatively small, unattractive market for iBuying for multiple reasons, one being our diverse housing stock makes it difficult to value/project using algorithms; areas with large scale tract housing tend to much more popular with iBuyers (and corporate buy and hold investors) because it’s much easier to calculate market values.

How It’s Going…

As noted earlier, Zillow exited the iBuying business after ~$1B in losses over 3.5 years, leaving Open Door (market cap $3B+) as the main players in this category. I was curious how Open Door’s business is performing in Northern Virginia so I dug into their data from this year.

I looked at all of Open Door’s currently active (88), currently under contract (29), and sold (35) properties in 2022 and found 152 properties. I was able to find Open Door’s purchase price on 112 of those properties via public records.

Of the 112 homes I found Open Door’s purchase price on, the total acquisition price for these properties was $63,464,400, for an average of $566,646 per property, ranging from $207,100 to $1,031,800. If we assume their average purchase price held for the 40 properties I couldn’t find an acquisition price for, we can estimate their total acquisition price for all 152 properties in this data set (Northern Virginia sold in 2022 or currently under contract or listed for sale) to be $86,130,257.

Based on the analysis below, I think they may end up losing $5M-$6M+ on these investments.

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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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: I’ve noticed a lot less homes being listed lately, will that continue for the rest of the year?

Answer: I hope everybody had a great holiday weekend! For those in the market to purchase, you’ll want to quickly shift out of vacation-mode and into house-hunting mode this week because you’ll see a lot more homes being listed for sale in the coming week(s) than you have over the last couple of months.

Historically, September comes in just behind March and June for new listing activity, with much of that front-loaded in the week or two following Labor Day weekend.

This follows a similar trend on the demand side where we see peak demand from roughly mid-March to early June, with a slowdown during the summer vacation months, followed by a brief spike in buying activity following Labor Day weekend with dwindling buyer interest through the remainder of the year.

However, the seasonal increase in September demand generally lags the pace of new inventory and thus results in the most average available listings for sale in September and October, before falling rapidly in November and December because the volume of new inventory drops by over 50%. For buyers, that means that the next 4-8 weeks will be your last chance at a wide variety of homes for sale until March.

Projected Surge in Available Inventory

As of 10 a.m. Monday, September 5, there are 369 homes listed for sales in Arlington and a whopping 42 homes in Coming Soon status, 34 of which are scheduled to hit the market within the next week. The homes in Coming Soon status will boost total inventory by nearly 10% and there are sure to be plenty of homes listed for sale over the next week that are not showing in Coming Soon.

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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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: What is the difference between my individual condo insurance and the Association’s master insurance policy and do I need my own insurance?

Answer: Every condo association has its own (expensive) Master Insurance policy to cover the common elements and limited common elements, but there are substantial gaps between the association’s policy and what you’re personally liable for without an individual HO-6 policy. Most people shop for the cheapest, fastest individual insurance policy and apply just enough coverage to meet the lender’s requirements, but that may put you at financial risk.

To explain common gaps between master policies and HO-6 (individual condo) policies, I’d like to re-introduce Andrew Schlaffer, Owner and President of ACO Insurance Group. Andrew is an expert in Master Insurance policies and has helped multiple local condo association’s reduce their cost and improve their coverage since writing a column on the topic last year. If you’d like to contact Andrew directly to review your association’s master policy, you can reach him at (703) 595-9760 or [email protected].

Take it away Andrew…

Master Insurance vs Individual Insurance Policy

Nearly all master insurance policies in this area are written on a Single Entity basis which means coverage extends to general and limited common elements but also extends within individual units to fixtures, appliances, walls, floor coverings and cabinetry, but only for like kind and quality to that conveyed by the developer to the original owner.

Items not covered by the master insurance policy and are generally not the association’s responsibility include:

• Personal Property (clothes, electronics, furniture, money, artwork, jewelry)
• Betterments and Improvements (demonstrable upgrades completed after the initial conveyance)
• Additional Living Expenses (the cost to live at a temporary location, storage fees, loss of rents)
• Personal Liability (provides protection for bodily injury or property damage claims arising from your unit)
• Loss Assessment (triggered only if there is a covered cause of loss and the master insurance policy limits are exhausted; this assessment would apply collectively to all unit owners)
• Medical Payments (no fault coverage available for injured guests within your unit)

Condo owners should purchase an individual condo insurance policy (HO-6), which is also required by lenders. This policy can provide coverage for the items listed above.

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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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Questions: We’re making an offer on a home that has been on the market for a few weeks and want to include contingencies, what is normal?

Answer: Contingencies can be used by buyers to reduce their risk in a real estate transaction by allowing them, in specifically defined scenarios, to renegotiate contract terms or cancel a contract without losing their Earnest Money Deposit. The three most common contingencies are the home inspection contingency, financing contingency and appraisal contingency.

The shift in market conditions over the last 3-4 months has meant adjusting from a market where most winning offers did not include any contingencies to a market where many buyers are able to include at least one or two contingencies, often all three.

This week I thought it would be helpful to refresh everybody’s understanding of the three most common contingencies and what protections they provide to buyers.

Home Inspection Contingency

• Purpose: Allows buyers to hire a licensed home inspector who will provide a detailed assessment of a home’s condition and recommendations for repair, replacement and maintenance.
• Structure: The inspection contingency offers two options. One being the ability to void the contract after the inspection and the second being the option to void and the option to negotiate for repairs or credits based on the results of the inspection.
• Timeline: In most cases, I see inspection contingencies last 3-10 days and if there is a negotiation period, those often last 2- 5 days.

Financing Contingency

• Purpose: Protects buyers if they do not get approved for their loan and allows them to void the contract or delay closing without losing their Earnest Money Deposit.
• Structure: The financing contingency can either automatically expire at the end of the contingency period or extend to the closing date, unless the seller takes formal action to remove it after the contingency period ends.
• Timeline: In most cases, I see financing contingencies last 10-24 days. It is a good idea to consult your lender on this timeline.

Appraisal Contingency

• Purpose: Protects buyers in the event the property appraises for less than the contract purchase price. It allows a buyer the option to void, renegotiate or proceed.
• Structure: In some cases, through a separate addendum, buyers may agree to waive a specified difference between the appraised value and purchase price and make the appraisal contingency only if the appraisal value is below a certain number.
• Timeline: In most cases, I see appraisal contingencies last 10-24 days. It is a good idea to consult your lender on this timeline.

As a buyer, it is important to understand that the use of, structure, and timeline of contingencies in your offer play a significant role in how a seller responds to your offer.

In some cases, contingencies (or lack of) may have a greater influence on negotiations and a seller’s response than price, so it is important to approach contingencies thoughtfully and strategically based on your interest in a home, days on market, and an assortment of other factors.

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 Ask Eli, Live With Jean playlist.

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 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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: Are you seeing different patterns in the housing market slowdown in different parts of the region?

Answer: In September 2020, I wrote an article highlighting how extreme the differences were between the demand shift in Arlington compared to outer suburbs like Fairfax and Loudoun County.

In short, Arlington was competitive before the COVID surge and the outer suburbs lagged far behind it, but once the COVID surge began, Arlington became moderately more competitive while the outer suburbs experienced an extreme shift in market conditions, becoming more competitive than Arlington in just a few months.

Fast-forward two years and we are seeing something of a rubberband-effect as the entire housing market slows down, with noticeable shifts in all markets, but more extreme shifts in the outer suburbs. Not that we are witnessing anything close to a crash, the market is still good for sellers, but very different than what we’ve seen the last two years.

Note: this analysis focused on the single-family/detached housing market, not condos or townhouses.

Outer Suburbs Slowing Faster, Arlington King of Stability

Months of Supply (MoS), a measure of supply and demand that calculates how long existing inventory levels will last based on the current pace of demand (lower levels favor sellers), tells the story better than any other metric.

In the charts below, you can see our regional story of the pre-COVID, COVID and current real estate market play out:

• Competition in the outer suburbs generally trailed the D.C. and Arlington markets, offering buyers more time and leverage in their purchase decisions.
• After Amazon announced HQ2 in November 2018, MoS in Arlington dropped sharply as demand picked up and supply dropped, with a more modest, lagging effect on the surrounding markets.
• The COVID market from roughly summer 2020-spring 2022 sent MoS lower (favorable to sellers) in all markets, but the drop in MoS in outer suburbs was more extreme, pushing those markets well below Arlington and D.C., making them extraordinarily competitive.
• As of July 2022, MoS in the outer suburbs was still lower than Arlington and D.C., but rapidly increasing. The year-over-year increase in MoS in Loudoun County was 94.4%, nearly double what it was in July 2021. The increases in MoS were 67.4% (DC), 41.6% (Fairfax Co), and 27.8% (Arlington).
• You can see the steadiness and strength of the Arlington housing market play out over the past five years in these two charts.

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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. Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist. Enjoy!

Question: How much of an effect do expensive new construction homes have on the average prices in Arlington?

Answer: A couple of weeks ago I offered a mid-year review of the single-family housing (SFH) market in Arlington and average prices were a focal point. This week, we’ll look at some pricing data with and without new construction included to understand how much new builds influence our average prices. Please note that the data used below is based on new construction sales entered into the MLS and accounts for most, not all new construction sales.

New Construction Prices High, Effect Limited

So far in 2022, a new SFH home has sold for an average of nearly $1,000,000 more than resales. Sales of new SFHs have accounted for 9% of total sales but only account for a 6.8% increase in Arlington’s average home value. The numbers were similar last year.

22207 Dominates New Construction Sales

Since 2018, the 22207 zip code has accounted for 54% of all new SFH sales in Arlington and so far in 2022, 22207 has accounted for 60.3% of new SFH sales. In 2022, new home sales have accounted for 14% of all sales in 22207 and are responsible for increasing the average home price in 22207 by $120,000.

Average New SFH Nearly $2.2M

In 2021, the average new SFH crossed over $2M for the first time and after a 7% increase in average prices so far in 2022, the average new SFH is nearly $2.2M. There are still some markets where you might find a new house under $2M including 22205 where lots, and thus homes, tend to be smaller than neighboring North Arlington zip codes.

The 22204 zip code far out-paced other zip codes in average price appreciation for new SFH, increasing by 15% from 2021 to 2022. I expect similar double-digit growth in new construction prices in 22204 for another year or two until the gap between 22204 and other Arlington neighborhoods gets tighter.

So far in 2022, new SFH outside of 22204 is selling for an average of over $2,273,000, which is 45.1% higher than new homes in 22204. The percentage gap of average prices of resale homes in 22204 versus other Arlington zip codes is similar, at 48%.

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 Ask Eli, Live With Jean playlist.

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