Is the market ‘truly staggering’?
If you read just the headlines in the news regarding the housing market, you would have a rosy picture of what is happening. Here are just a few headlines from this past week:
D.C.-area housing market flourishes despite coronavirus
Northern Virginia housing market seeing ‘truly staggering sales volume’
Mortgage rates hit 10th record low of 2020, further fueling the US housing market's boom
In the chart above, the supply of single family homes, shown in red, has fairly steady and fairly low over the past two years. The supply of condos has had more fluctuation from an extreme low of a 1/2 month supply to just under a 3 month supply in September.
All of these articles were written from a broad, high-level view. When you dig a little deeper, you get two different pictures.
This week I look at the condo market in Arlington compared to the single family home market. These two segments usually move loosely in the same direction - but not always as we are currently seeing.
Another way of looking at the supply is look the number of active listings. The options for a condo buyer are much higher today than a year ago - a welcome relief for many buyers.
The number of active listings is going to be a reflection of the number of new listings and how long they stay on the market. When we look at just the new listings, we can see two things. One, there has been a jump in new listings over the summer. The spring is usually the busiest time in the real estate market, however, this year because of the pandemic and the shut down, the market was shifted by several months. Summer is the new spring! The second thing to notice is the seasonal fluctuation for single family homes. This is no big surprise because home buyers are buying more than just the house, they are also buying a piece of property and that is easier to see (and looks better) in the non-winter months.
There are various reasons for these differences. Here are a few of my thoughts:
- COVID-19 - This is the big elephant in the room. People are more concerned these days with shared living spaces and in condos, with common elements including elevators, it is hard to completely isolate yourself and your family.
- Less Commuting via Metro - One of the big attractions of condo living is the accessibility to the metro. Zoning codes allow the highest housing density around a metro station, which is why you see condo buildings around the stations. However, with COVID-19 and the rise of Zoom meetings, more people are working remotely these days.
- Job location less important - This ties in with the second point. Many workers can work remotely from anywhere and more employers are looking at this as a long term option. Let’s face it, real estate in Arlington is pricey partly due to the location and proximity to the city for employment. If that becomes less important, it will be reflected in the price.
- Eviction moratorium - There are a higher proportion of investors in the condo market than the single family home market. The eviction moratorium has been hard on small investors and many are sitting on the sidelines for the moment, further decreasing demand for condos.
