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: After months of articles about extreme appreciation in 22202, the Amazon HQ2 zip code making up neighborhoods like Crystal City, Pentagon City, Aurora Highlands/Hills and Arlington Ridge, there was an article published last week by the Washington Business Journal claiming that prices are now below pre-Amazon HQ2 announcement levels. The supporting data was that median sold price in November 2019 was 12% lower than November 2018 prices.
This is yet another example of lazy reporting on Amazon’s impact on local real estate with the sole intention of generating clicks.
First of all, if you use the average sold price instead of median, there was a 2.3% increase in prices from November ’18 to November ’19, not a 12% decrease. Second, with a drop in total sales from 30 in 2018 to just 12 in 2019, with prices ranging from $255,000 to $1,145,000, there’s just not enough data to draw any sort of reliable conclusion on market performance by comparing the two months.
To generate reliable real estate trends, you either need a lot of data points (sales) or drill into smaller data sets. With that said, let’s dive into some real analysis on how Amazon HQ2 has impacted residential real estate for its new neighbors in 22202.
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 135 homes to sell so far in 2019, 76 were in condo buildings, 47 were detached homes and 11 were townhouses.
Condo Market
Inventory levels in the 22202 condo market took a huge hit, dropping 40% from 130 sales in 2018 to just 76 in 2019 (with two more scheduled to close in 2019). The decline is attributed to owners choosing not to sell (holding out for more appreciation), certainly not lack of demand.
As a whole, the average sold price in the 22202 condo market increase 22.8% ($402k to $492k) and median price increased 18.6% ($379k to $450k) for properties that went under contract after Amazon’s November 13 HQ2 announcement.
However, don’t think individual property values appreciated ~20%. The entire market is skewed higher because of a big drop-off in less expensive studios (60% decline) and 1 BRs (33% decline).
Let’s take a deeper look at how property values actually changed by looking at similar sales within comparable buildings. I’ve grouped all buildings along Arlington Ridge and Army Navy Drive, along Crystal Drive, and both Eclipse buildings so that we have larger sample sizes to compare pricing activity from within comparable buildings. I limited this data set to one- and two-bedroom units.
The percentages for each building group represent the change from properties sold in 2018 and 2019 that went under contract pre-Amazon announcement vs post-Amazon announcement (November 13, 2018).
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