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.)
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).
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).
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.
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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.