Arlington Condos: Bottomed Out in April 2007. Or maybe it was January. No wait...

By
Real Estate Agent with Keller Williams

As my clients know, I'm a "numbers person."  It's the CPA in me.  I love to sift through data, find trends, draw conclusions.  I provide a monthly email update to my clients (see my website at www.katiewethman.com to sign up) that includes graphs of average sales prices for Arlington, DC, and Northern Virginia.  It's a broad measure, and far from perfect, but I do what I can in just one page.  Diving down into the micro-markets, though, tells the real story.

Let's look first at my year-to-date Arlington sales prices.  This includes detached homes, townhouses, and condos/co-ops.  Looking at this chart, the lowest point in the past 2 years was August 2006, which just barely edged out January 2007.  (Apologies in advance for the awkward sizing - I tried to resize but it made the graph grainy and unreadable.) 

 Arlington Sales Prices

 But with an average that includes all homes of all types and sizes, how useful is it to an individual buyer?  Let's say, someone specifically looking at a 1 bedroom condo?  And anyone who lives in the area knows that there is a huge difference between living in North Arlington versus South Arlington, and even more specifically whether you're walking distance to a metro.  So let's look more specifically at data for a 1BR condo in zip code 22201 (which includes Ballston and Clarendon).  

 

 22201 1BR Condo Sales

Well, in 2007 it looks like the bottom was in January of 2007, then had a quick runup, bounced around a bit this summer, and looks poised for another dive going into the "off season."  So, one observation is that the 1BR condo market is tending to jump around a LOT more than the overall Arlington home market.  One might draw the conclusion that if you want a 1BR unit along the orange line, you can expect to pay between $305 and $365, depending on the month.  What?? Is that right?  Can you time the market like that? Read on.

 Now let's say that buyer has decided on the orange line.  Does the buyer care whether he buys in, say, the Alta Vista, versus the Odysssey?  Or Colonial Village versus the Continental?  Of course he does!  So in reality this 1BR condo average isn't really that useful to a focused buyer, either.  Let's take the Continental and look at the average sold prices for a 1BR there (NB: I took out one comp that was a 1BR and den, which obviously would sell for more than a straight up 1BR).  

 Continental 1BR

 Now we're getting something a little more useful!  A buyer looking at the Continental might expect to pay between $360 and $390.  A variance of that amount can easily be explained by square footage, number of parking spaces, property condition, and sellers' needs (e.g., are they carrying a mortgage on a vacant unit?  Have they already purchased their next home and desperately need to get out of this one?).  Even with these factors, the "low" was in April of 2007.  So much for that steadily declining condo market and waiting for the bottom!  I'll caveat all this, of course - at this level of detail we're talking 1-3 units per month, so it's a pretty small sample size.  In addition, none of this data accounts for seller subsidies (as an alternative to a lower sales price.)  I'm going to make what I think is a fair assumption though and say that seller subsidies have been consistent throughout the year, so the trend will be the same.  

My point in all of this is that statistics can be misleading, and can cause you to make a bad decision.  I've shown here just how different a story can be from one building up to the county level.  Now extrapolate that to the national statistics that are usually reported.  Can you really draw a conclusion on buying versus waiting from data at that level??  

If your life circumstances (financial, lifestyle, etc.) have you thinking you want to buy in the next year or two, it won't hurt to start a search now to narrow down what you are looking for.  You may be surprised about market conditions when you get down into the details. 

Data Source: MRIS.  All data deemed reliable but not guaranteed.

 

Sign up for one of my free "First Time Buyer Seminars" in Arlington to learn more about the home purchase process and market conditions.  

Contact Katie Wethman, CPA, MBA, REALTOR® at (703) 847-3336 or via email to list your property for sale or to purchase a property in the Washington, DC, Arlington, Alexandria, Fairfax County, Fairfax City, or Falls Church City.  I specialize in first time buyers.  Visit my website to find out more about my services, or read more on my blog.

Copyright © 2008 by Katie Wethman, All Rights Reserved.

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Rainmaker
604,501
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs
That is more data than my brain can comsume. I get the point. The funny thing is that I rarely look at real estate numbers for any length of time. If I am buyig a stock then I dwell on them. Informative blog, do you concentrate on condos?
Nov 12, 2007 10:36 AM #1
Rainmaker
88,658
Katie Wethman
Keller Williams - Falls Church, VA
CPA, MBA, Realtor - Northern Virginia & DC Real Estate
Eric, sorry for the delay in responding.  While I don't focus exclusively on condos, the majority of my business does in fact end up being condos because I work with a lot of first time buyers.  Given the prices around here (a 1BR condo goes for $250-$450K), the financial constraints put most first time buyers into the condo market.  
Nov 18, 2007 03:59 AM #2
Rainmaker
604,501
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs
Katie, take a look at my website where I do concentrate on Condos. We may be able to exchange some ideas. www.neworleanscondos.net . Its a niche that I enjoy working and meeting the people. It took me a while to figure it out. Eric  
Nov 18, 2007 04:25 AM #3
Rainmaker
138,125
FRANK LL0SA Esq.- Northern Virginia Broker .:. FranklyRealty.com
Northern Virginia Homes - FRANKLY REAL ESTATE Inc - Arlington, VA

Hey Katie,

Some amazing charts here. For those out there looking for data, this stuff takes time! Thank you. 

What do you think accounts for the huge swings. Moving From 500k to $550k in 6 months is pretty much a 20% annualized increase. How can that be accurate?


Would it be more accurate to use the Median price? It is so hard to REALLY determine the direction of a market based on numbers, since numbers can so easily skew in one direction or another.

    Frank 

Nov 19, 2007 06:04 PM #4
Rainmaker
88,658
Katie Wethman
Keller Williams - Falls Church, VA
CPA, MBA, Realtor - Northern Virginia & DC Real Estate

Frank, thanks for the comments.  yes, median would be much more accurate, you're right.  I'll probably use that in analyses going forward.  When you get down to the level of one building though, there are just 1-2 transactions, so it becomes a moot point.  

Re: skewed numbers - YES, that is exactly the point (though in my meandering post it's probably buried..."My point in all of this is that statistics can be misleading, and can cause you to make a bad decision.")  I was really trying to make the point that it's silly to wait for the "bottom" because it IS so easy to skew numbers and worse, the numbers that are readily available to the public (or at least the ones they take the time to look at) don't discuss methodology, what's included, etc.  Chances are we won't know the generic "bottom" until long after it's happened because it doesn't get reported until the very highest level stats are all consistent.  Whereas the "recovery" might be right before our eyes in certain buildings or neighborhoods.  Every month there are articles about the "average Arlington home price" and yet what I tried to show here is that a data point like that is practically worthless.  You can interpret the "bottom" in a dozen ways.  

I think I probably need to clean up the post a bit, or try again with new stats.  Thanks for the input!

Nov 20, 2007 02:23 AM #5
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Rainmaker
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Katie Wethman

CPA, MBA, Realtor - Northern Virginia & DC Real Estate
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