By Dr. Keith Waters and Dr. Terry Clower
George Mason University, Center for Regional Analysis
As the last of the pandemic effects fade, it seems appropriate to check back in on the condominium, or condo, market in the Northern Virginia Association of Realtors® (NVAR) region, as this market was arguably the most dramatically impacted. In the immediate wake of the pandemic, active listings pulled back as sellers reassessed their plans and then increased dramatically at the end of 2020 and into 2021 as owners tried to offload properties that were seen as being more conducive to the spread of the coronavirus. Since this immediate reaction, however, the condo market in the NVAR region has not only survived but thrived. As the pandemic has normalized hybrid-remote work, NVAR Realtors® are serving an even larger geography, and thus we are including counties adjacent to NVAR proper jurisdictions.
In the lead up to the pandemic, condo supply (active listings) in the Greater NVAR region was in the midst of a long-developing supply contraction that began in the summer of 2015. Total active listings in the greater NVAR region peaked at 2,188 in July 2015, before declining relentlessly for five consecutive years to a low of just 427 in December 2019. The COVID-19 pandemic sparked fears about being near other people, which resulted in the mass adoption of remote work. These factors resulted in both increased choice in where to live for buyers but also a reduced demand for dense condo living. For the condo market, the result was an increased number of active listings, which spiked to 1,397 by October 2020. However, after a year of limited alternate options and the most acute pandemic fears having faded, active supply quickly reverted to pre-pandemic trends, contracting sharply to just 533 by February 2022, eventually hitting a low of 489 in January 2024. This trend was recorded in all jurisdictions in the Greater NVAR region, varying only by the size of the condo market in each (Figure 1). While recent months have recorded some supply expansion in the NVAR region, it seems likely that if the Federal Reserve moves to lower the Federal Funds rate, supply may again contract as new buyers enter the market to take advantage of lower mortgage rates.
Figure 1. Active Listings (Month-End) of Condos in the Greater NVAR Region
Examining subregional variation of condo prices, Figure 2 displays the median closed price for condos sold in 2024 by zip code. Note that not all zip codes had closed sales. The two zip codes with the highest closed sales prices were Del Ray and Tysons, with median closed prices of over $590,000 each. Old Town Alexandria had the third highest median closed sales price at $575,000. Other zip codes with high closed sales prices include Western Arlington near the East Falls Church Metro, Vienna, Rosslyn, and Southwest Ashburn. For buyers priced out of these areas, there tend to be adjacent zip codes that have notably lower median prices.
Figure 2. Median Condo Prices in the Greater NVAR Region by Zip Code
Examining jurisdictional level data from 2019 through the first half of 2024 reveals that the regions with the highest sales prices are not necessarily those that recorded the largest price increases in the wake of the pandemic. While Arlington has several of the most expensive condo markets in the NVAR region, the median condo price increased just 7.7% from 2019 to 2024, with nearly all the increase coming between 2023 and 2024. Meanwhile, the median price of sold condos in Manassas and Prince William County increased 57.1% and 53.3% respectively. Loudoun County is the exception, the county recorded strong price growth and is home to some of the most expensive condo submarkets.
Figure 3. Jurisdiction Median Price Index
A trend that has held up in the wake of the pandemic, including in the condominium market, is the apparent buyer preference for more space. Examining the median price index of condos in the Greater NVAR region by number of bedrooms (Figure 4), reveals that the strongest price growth has been among condos with two or three bedrooms. It is nearly certainly the case these have seen stronger price growth as buyers look to use additional bedrooms as home offices and flex space for home-school days. From 2019 to 2023, the median prices of two- and three-bedroom condos increased 33.0% and 37.0%, respectively. Meanwhile, the median prices of studio and one-bedroom apartments only increased 15.5% and 21.5%, respectively.
Figure 4. Jurisdiction Median Price Index
Overall, although the pandemic briefly triggered an increase in active condo listings in the Greater NVAR region, the longer-term trend of relentless supply declines resumed just two years later. Locations that have historically been the most desirable locations for condo owners, such as Alexandria, Arlington, and Tysons, have remained the most desirable. However, there have been strong price gains in new, more exurban markets (areas outside of the denser inner suburbs), such as Manassas and Prince William. Finally, the desire for more bedrooms, sparked largely by hybrid work appears here to stay, with larger condos having recorded the strongest price growth in the wake of the pandemic. Moving into the rest of 2024, it will be worth keeping an eye out on the number of active listings of condos. While there has been a slight increase in the middle of 2024, it will be interesting to see if the trend continues or if this is just a blip.