A Tale of Two Cities
People often ask me how the condo market in Arlington compares to the condo market in DC. Both are dense, urban areas that have a shared history.
Arlington was part of the original ten-mile square surveyed in 1791 for the Nation’s Capital. In 1847, at the request of the local residents, Congress retroceded Arlington to the Commonwealth of Virginia.
The Potomac River separates the two geographic areas but there is much more that separates the two markets.
When comparing two markets, a few market stats I first look at are days on market (DOM), pricing ratios, and inventory levels. Let's see how the two compare.
Days On Market
One key factor for any real estate market is how long properties stay on the market before being sold. This metric can indicate demand and the overall health of the market.
A detailed analysis of DOM can therefore provide insight into market trends. A decreasing DOM over time typically suggests a hot market with increasing demand and possibly rising prices. On the other hand, an increasing DOM might signal a cooling market, where properties take longer to sell perhaps due to economic factors, oversupply, or shifting buyer preferences. Monitoring DOM closely can help both buyers and sellers make informed decisions—buyers can gauge how aggressive they need to be in their offers, while sellers can set competitive prices to ensure faster sales.
In Arlington, VA, condos typically spend around 20 days on the market before being sold. This relatively quick turnover suggests a strong demand and a competitive market.
In contrast, condos in Washington, DC have an average of 45 days on the market. For all of 2024 so far, condos in DC have consistently stayed on the market than compared to condos in Arlington.
Arlington
DC
Sale Price to Original Price Ratio
The sale price to original list price ratio, which takes into account any price reductions before the final sale. This ratio can provide additional context on how realistic initial price expectations are and how they align with market conditions as the listing goes through its lifecycle. This ratio serves as a marker for market competitiveness and seller pricing strategies. A high ratio suggests that the market is competitive, with buyers less likely to negotiate prices down significantly, often a sign of high demand and limited supply. For example, a market with a lower sale price to original list price ratio might suggest that initial pricing was overly ambitious or that market conditions have softened.
Monitoring the pricing ratio helps stakeholders make more informed decisions. For sellers, understanding these metrics can aid in setting realistic initial prices to attract serious buyers quickly. For buyers, pricing ratios help in assessing how much room there is to negotiate and how urgently they should act in making an offer. By closely analyzing these ratios, both can strategically position themselves to achieve the best possible outcome in their real estate transactions.
IIn Arlington, the pricing ratio stands at 100% for the past four months, indicating that condos are closing very close to their list prices. This high ratio shows strong buyer interest and minimal room for negotiation.
In contract, Washington, DC condos have a pricing ratio of 98.4%. While still strong, it suggests slightly more room for negotiation compared to Arlington.
Insight: Sellers in Arlington can expect to achieve closer to their asking prices, reflecting strong market demand. In contrast, buyers in Washington, DC might find more opportunities to negotiate and potentially secure deals below the asking price.
Arlington
DC
Inventory Level
nventory levels provide a snapshot of the supply side of the market. A higher inventory indicates a buyer's market, while lower inventory levels generally favour sellers. Arlington typically maintains a lower inventory level for condos, contributing to the quicker sales and higher pricing ratios observed. Over the past year, Arlington’s inventory levels have averaged about 2.5 months, whereas DC typically sees around 3.5 months of inventory. This disparity suggests Arlington’s market is tighter, making it more competitive for buyers.
Inventory levels, often expressed in terms of "months of supply," represent the number of months it would take to sell all the current homes on the market if no new listings were added. This metric offers insight into the balance between supply and demand in the real estate market. For instance, an inventory level of 6 months is typically considered a balanced market, where neither buyers nor sellers have a distinct advantage.
When inventory levels drop below this threshold, indicating fewer months of supply, it leans towards a seller's market, characterized by limited choices for buyers and potential for higher prices. Conversely, when inventory levels exceed 6 months of supply, it becomes a buyer’s market, with an abundance of choices and likely lower prices due to the greater competition among sellers.
Arlington currently has an inventory level of 1.57 months of supply, signaling a strong seller's market. This low supply means condos are moving fast, and buyers have fewer options.
Washington, DC has an inventory level of 5.13 months of supply, which is a more balanced market.
Insight: Arlington’s significantly lower inventory level highlights a tighter market with scarce options for buyers, driving quicker sales and potentially higher prices. On the other hand, Washington, DC offers slightly more choices for buyers, possibly leading to more negotiation leverage.
Arlington
DC
Summary
For Sellers
If you’re looking to sell a condo quickly and at a price close to your listing, Arlington, VA is likely your best bet. The lower days on market and high pricing ratios work in your favor.
For Buyers
If you prefer more inventory options and a bit of negotiation leverage, Washington, DC offers a more balanced approach. The extra time on the market and higher months of supply give you a chance to find the perfect fit without as much pressure.
