When buyers snap up a small house that needs updating for more than $800,000 or $900,000 and well over a seller’s asking price, you know you’re probably in Arlington, Va.

Once a bedroom suburb for the thousands of federal workers hired to work in the District during World War II, Arlington County is consistently one of most sought-after areas in the country. The addition of Amazon’s HQ2 to the community has fed the frenzy to own in the area well before any new employees arrive. (Amazon founder Jeff Bezos owns The Washington Post.)

Demand is still high for homes in Arlington, with buyers searching online rather than in person until the coronavirus pandemic is under control.

Arlington’s proximity to the District and Metro access are part of its appeal, but they are not the only reasons people want to live there.

“It’s not just the commute, it’s also the community and the character of the houses,” says Diane Schline, a real estate agent with Century 21 Redwood Realty in Arlington. “The schools are highly rated, too. The Amazon decision just added to people’s comfort in the market, because when a powerhouse company chooses Arlington it gives everyone confidence.”

Competition for homes has heated up since the Amazon decision, but Schline says she thinks that might have happened anyway because of the extremely limited supply of homes, low mortgage rates and the abundance of buyers in this area with the cash for a 20 percent down payment on a $1 million home.

What it takes to buy in Arlington

Buyers should anticipate a bidding war for nearly every property in Arlington, says Allison Goodhart DuShuttle, a real estate agent with the Goodhart Group at Compass real estate brokerage in Arlington.

“It used to be that North Arlington was hotter and homes would sell faster there than in South Arlington, but that’s less common now,” says DuShuttle. “Now anything in decent condition that’s priced the same or slightly higher than nearby homes will sell within a few days. Buyers need to expect to compete against six to eight other offers and to pay above the sales price of nearby homes this spring.”

Unfortunately, competition means eliminating most protections for buyers, says DuShuttle.

“Your offer cannot have any contingencies,” she says. “Most buyers are doing a pre-offer home inspection, waiving the financing and appraisal contingencies, offering a quick closing and even letting the sellers rent back their house for free.”

DuShuttle’s research found that in February, the average sales price for all homes in Arlington that sold for less than $1 million was 105 percent above the initial asking price. Recently, for example, a home listed for $750,000 sold for $820,000 even though it needs work.

“If buyers waive the appraisal contingency, they must have the cash necessary to bridge the gap between the value of the house and the sales price,” says DuShuttle. “A good lender can help someone get creative to address this, such as switching from a 20 percent down payment to 10 percent down.”

What you can find in Arlington

The “cream of the crop” in Arlington is Lyon Village, but it’s not affordable or attainable for most buyers, says Schline. A tear-down there will cost $1.1 million to $1.2 million just for a 6,000-square-foot lot. After that, buyers would spend another $500,000 or more to build a new house on the land.

The Westover neighborhood, close to the East Falls Church Metro station, has a small downtown area with shops, restaurants and a farmer’s market, says Schline. Homes there are typically priced at $1.1 million and up. Schline says Yorktown, which is north of Lee Highway, and Waverly Hills near Ballston and the Lee Heights shopping areas, are also popular with buyers of single-family houses. In Yorktown, the handful of homes on the market now range from $1.5 million to $1.9 million.

“The Arlington Ridge neighborhood is poised to take off,” says DuShuttle. “It’s convenient to D.C., you can walk to Metro and it’s close to the new Amazon headquarters. It’s ‘affordable’ for Arlington, with most single-family homes priced under $1 million.”

A more affordable option is the older townhouse-style condos in Fairlington, although Schline says buyers face competition there, too. The apartments, built in the 1940s, were converted to condos in the 1970s. Prices range from the $400,000s to the $600,000s there.

For example, a 1,383-square-foot two-bedroom, two-bathroom end-unit townhouse at 4863 S. 28th St. in Fairlington is listing for $524,900. Updates include the kitchen, bathrooms and windows.

“If you’re looking to spend under $400,000 in Arlington, you can’t be hung up on where in the county you want to be and you’re not likely to find multiple bedrooms and bathrooms,” says Schline. “For $300,000, you’re likely to get a studio or a one-bedroom at most and you’re less likely to have an in-unit washer-and-dryer.”

For example, a 670-square-foot one-bedroom, one-bathroom condo at 900 N. Stafford St. #1214, Arlington, is listing for $399,900. Unit 1214 at the Alta Vista in Ballston sits on top of the Ballston Metro and has direct access via a covered bridge to Ballston Quarter shops and restaurants.

New construction

The limited number of available homes in Arlington isn’t likely to change in the coming year or two, says Moustafa Fahmy, an associate with Delta Associates, a commercial real estate research and advisory firm in Washington, D.C.

“There are three condo projects under construction or expected to start construction in the next three years,” says Fahmy. “There are six more condo projects that are future possibilities but are still unconfirmed. We think some planned buildings could convert from rentals to condos.”

Most new construction in the county is rental apartments.

Among the new condos, Trafalgar Flats on Columbia Pike is nearly sold out, says Fahmy.

The Pierce, a luxury building at 1555 Wilson Blvd. under development by Penzance, will have 104 condos with 1,066 to 2,400 square feet priced from the $900,000s up to $3 million, says DuShuttle.

At 2000 Clarendon, an 87-unit condo near the Courthouse Metro station, prices range from the $500,000s to more than $1 million, says DuShuttle.

Nineteen townhouses, priced from $975,000, will be built at Trenton Square at 19 N. Trenton St. by Madison Homes.

Buyers looking for a newly built single-family house in Arlington will either need to purchase a tear-down for $900,000 or more, or expect to pay at least $1.4 million to $1.8 million and up, says Sara Melander, a real estate agent with the Goodhart Group at Compass.

Unfortunately for buyers who want to live in Arlington, hot equals expensive.