Ask McEnearney: How did the real estate market for the first half of 2021 compare with 2020?

This week’s Q&A column is written by David Howell, Executive Vice President and Chief Information Officer, of McEnearney Associates Realtors®, the leading real estate firm in Alexandria. To learn more about this article and relevant market news, contact David at 703-738-9513 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.

Question: How did the real estate market for the first half of 2021 compare with 2020?

Answer: The City of Alexandria’s real estate market saw substantial improvement in the first half of 2021, but it would have been stunning had it turned out any other way given the doldrums of the COVID market during the spring of 2020.

Attached homes fared best, with a 52% increase in the number of units sold, and those homes sold in an average of just 16 days and for almost 1% above list price. Detached homes sold in an average of 21 days and slightly above list price. Condos, on the other hand, took almost twice as long to sell as attached homes.

The reason for the big difference in the time on the market boils down to one word: inventory. On average, there were more than twice as many condos on the market in Alexandria as the same time last year, and for smaller studio and one-bedroom units, there was triple the inventory.

Historically, condos make up about 40% of all the homes on the market at any given time in Alexandria, but during the first half of the year condos made up close to 60% of all homes on the market. That meant that buyers had plenty of choices and there was no rush to purchase.

And one other item of note: the 12% increase in the average sold price of condos is both mathematically accurate and a bit misleading. A smaller proportion of less expensive condos sold compared to larger, more expensive units, and that fact alone skewed the average price higher.

What’s ahead for the second half of the year?

It’s important to point out the first half of last year was the aberration, with a significant drop in activity due to COVID. While the rebound in the market is encouraging, in many respects it represents a return to more normal levels of buying activity. As one example, there were just as many detached homes that sold in the first half of 2017 as the first half of this year. The market looks and feels hotter because of the lack of inventory for attached and detached homes.

• We expect buying activity to continue to improve — modestly — through the rest of the year.
• While the abundance of condo inventory will gradually be absorbed, there will continue to be relative bargains available to purchasers of smaller units.
• Continuing a trend from the last couple of months, there will be marginally more new listings coming on the market than homes going under contract. That will gradually begin to ease the very tight supply of attached and detached homes.
• Based on our own projections and the BrightMLS forward-looking Home Demand Index, almost every area of the City will be in the “high demand” category, signaling a healthy second half of the year.
• The area with the highest demand will likely be the West End.
• By price range, we will likely see detached homes priced between $700,000 and $1,250,000 continue to be exceptionally strong. For attached homes, the hottest price range will be $500,000 to $1,000,000. In both cases, these will be what we consider “extreme” seller’s markets.
• For condos, the hottest part of the market will be for units priced between $500,000 and $800,000, but that price range will not be as strong as the market for attached and detached homes.

Read our full mid-year Market Report online for more data on Alexandria City, as well as Northern Virginia, suburban Maryland and Washington, D.C.

If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703-549-9292.

McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria