Post-Boom House Price Dynamics (Arlington, McLean: sales, renting, movers)
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The main thing that I've observed in recent years is the enormous amount of infill properties in North Arlington, parts of inside-the-Beltway Fairfax like Falls Church and McLean, and even in outside-the-Beltway Vienna. The number of such teardowns seems, if anything, to be accelerating.
I have no idea what's in store for housing prices over a longer time horizon, but for the amount that people will pay for a property on 1/4 acre in North Arlington or 1/2 acre in McLean at prices that may be off their all-time highs, they could still get a similar house in Loudoun on anywhere from 3 acres in parts of Ashburn to 30 acres in Purcellville.
So there may be different trends at work at the same time, which counter-balance one another to varying degrees.
That is interesting. Any anecdotes for why people and money are moving further west? Before I moved here, I thought that DC was really the only show in town for employment. I now know that there is a large concentration of employment in Tysons Corner. Is there something similar in Loudoun County, or are all of these movers heading east to work in the morning?
Loudoun County attracts a lot of wealthy mid-career and retiree households. In particular, retired military seem to love Loudoun. So you get an empty nest with a substantial pension chasing entrepreneurial ventures.
I know lots of people doing the Tysons/Dulles Tech commute. I also know a lot of people working from home/telecommuting. The proximity to Dulles Airport is great for business trips.
Concerning Loudoun vs. Fairfax, there are a number of factors in play. But I'd sum it as moving to Fairfax to make your mark and send your kids to great schools. Move to Loudoun when schools and commuting don't matter as much.
...for the amount that people will pay for a property on 1/4 acre in North Arlington or 1/2 acre in McLean at prices that may be off their all-time highs, they could still get a similar house in Loudoun on anywhere from 3 acres in parts of Ashburn to 30 acres in Purcellville.
I have 1/2 an acre and that's plenty to upkeep for me. Maybe a good number of people desire smaller lots?
Location: Chapel Hill, NC, formerly NoVA and Phila
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As a non-professional, I'll take a stab at the whys of the NoVA regional housing market. Close-in suburbs like Arlington and McLean were going up during the early 2000's to unaffordable prices to most everyone but the wealthiest residents. Prices were going up at similar rates in concentric circles out from the city, but, at lower prices. So for example, a 4 BR home in Arlington cost $900K. In Vienna it was $700K, in Centreville was $500K, and in Manassas it was $400K. More and more people wanted to buy as real estate was a "sure thing." Those who were just starting out in their careers and had less savings really had nowhere to buy but farther out. So there was more building out in the farther suburbs and exurbs.
When the economy tanked, those starting out/low end of the totem pole lost jobs and couldn't keep up with their bills. So foreclosure rates out in those places were at a much higher rate than close-in. But the economy was never THAT bad here. There are always diplomats, state department-types, military folks, and rich foreigners who are moving in. Where do they want to live? Closer in, of course. So even though there was a depression of prices and some foreclosures in places like McLean and Arlington, there was still always a demand for these properties. In the meantime, there were tons of empty, foreclosed homes in Woodbridge and Manassas. But the demand? Not so much. Suddenly, people weren't qualifying anymore and newcomers to the real estate market got too scared to buy, even if they could still afford. Couple this with the likelihood that far-out areas were over-built for that early-2000 demand, so prices stayed low.
Now, add into the mix the reputation of schools. North Arlington and McLean schools have superior reputations (the subject of whether it's deserved or not has been rehashed over and over on other threads) to those in Woodbridge or Manassas. Again, the fewer people who ARE buying are going to buy where they are convenient to work and have good schools. In a way, with the schools, there is a snowball effect. Highly educated/wealthy individuals move in, improving test scores, which attracts more people to move in. And to be blunt, places like Arlington and McLean always (for the past 25 years) have enjoyed superior reputations, while Manassas and Woodbridge have always (past 25 years) had less favorable reputations.
Places that are not as "close-in" as Arlington or McLean suffered more but not as poorly as far out places like Manassas. Places like Falls Church/Vienna/Fairfax are still relatively close-in, with the first two having Metro access. And again, the areas with desireable schools win out every time with regards to price increases over those places with less desireable schools. School districts in Falls Church City/Vienna/and parts of Fairfax always are near the top of ranked schools in NoVA, so as long as families continue to move here, they will continue to move to those areas. And as mentioned earlier, Tysons is a major job center which will attract people to move to those cities.
Now Loudoun County is somewhat of an anomoly. The growth there has been tremendous over the past 10 years or so. But costs were always higher than Prince William County. When I used to travel to Woodbridge in the early 90's I was always struck by the number of run-down looking townhouse developments I saw. For lack of a better term, it was a "low-rent district." And as they aged, they looked worse. When I visited my husband who worked in Manassas for over a decade (until 4 months ago), I saw many similar types of developments. I get the impression that Loudoun had higher quality housing built - maybe fewer low-end townhouses and more high-end homes. Couple that with its repuation as horse country/farm country, it attracted a more yuppy-type home buyer. I also believe that Loudoun County set some rules about houses/per acre that PW didn't have. Also, at the same time, the Dulles Corrider was built up as a major job location, and more and more white-collar folks began looking at Loudoun as a place to live rather than PW or far-out Fairfax. Prices are still, of course, lower for comparable housing in Loudoun, than for housing in places like Arlington, but the rates didn't drop as fast or have as many foreclosures as places like Prince William. Educated, white-collar folks begat more educated white-collar folks. Coupled with decent schools and jobs nearby, the values didn't drop as much (%-wise) as PW.
Qualifier: I live(d) in Vienna, if you want to account for any biases I might have in my opinion above.
Fact: I bought my house for just under $300K in late 2000. At its peak, I could probably get $630K for the house. If I sold it today, I could probably get $575, so a 7% decline is probably pretty accurate. But considering the run-up that it had from the early part of the last decade, I'm hardly shedding any tears over the decrease. I'm also pretty confident my house would sell within two weeks of listing.
Last edited by michgc; 02-26-2012 at 02:51 PM..
Reason: added in a line about housing/acreage in Loudoun County
Fact: I bought my house for just under $300K in late 2000. At its peak, I could probably get $630K for the house. If I sold it today, I could probably get $575, so a 7% decline is probably pretty accurate. But considering the run-up that it had from the early part of the last decade, I'm hardly shedding any tears over the decrease. I'm also pretty confident my house would sell within two weeks of listing.
Are you looking to sell it? *grabs cash* The people who got the worst of it, and who I feel bad for, are transient workers such as military who bought in this area in 2006 for instance and then might have been re-stationed in 2009 at the worst of it and had nothing they could do with their house. I guess its why most people choose to rent if they are military.
The fact remains jobs = stable housing market. Ask the people of Miami, Phoenix, and Las Vegas where the jobs were building more houses. When that perpetual failure machine collapsed the propped up value of a bedroom in the middle of a desert or where there were no jobs finally became apparent. Thank god this area has such a good job market, it's our job as residents to keep building and making this area better so that in 20 years it will still be the economic envy of the Country.
Is there something similar in Loudoun County, or are all of these movers heading east to work in the morning?
The Dulles Tech Corridor extends all the way to Leesburg, plus there are several other large corporate campuses such as the Janelia Research Center in Leesburg. So we have lots of people who work right here in Loudoun, but also plenty who work in Tysons (and some who work as far east as DC, although that's less and less likely these days). There are also some people who live here and work in MD, taking the 15 to cross the Potomac.
As far as I can tell, prices in my neighborhood (Cascades, in eastern Loudoun) stabilized a year or more ago and now may be seeing a slight upswing. It's hard to tell since the season doesn't really get going until April. Turnover time seems to be shortening, although there are still some houses that seem to be for sale for many months. I don't know if they're over priced (probably), have problems, or just aren't in favorable locations. There don't seem to be a lot of properties for sale, one way or the other, so it's kind of hard to look for patterns.
The main thing that I've observed in recent years is the enormous amount of infill properties in North Arlington, parts of inside-the-Beltway Fairfax like Falls Church and McLean, and even in outside-the-Beltway Vienna. The number of such teardowns seems, if anything, to be accelerating.
I have no idea what's in store for housing prices over a longer time horizon, but for the amount that people will pay for a property on 1/4 acre in North Arlington or 1/2 acre in McLean at prices that may be off their all-time highs, they could still get a similar house in Loudoun on anywhere from 3 acres in parts of Ashburn to 30 acres in Purcellville.
So there may be different trends at work at the same time, which counter-balance one another to varying degrees.
There may be, but to the extent that OP is trying to answer the question as to why some areas have held value better than others at least to this point, one would need to identify a net trend or factor favoring the former. I agree that, in predicting the future, one can't ignore a substitution effect.
I agree with the OP it's best to look at the zip-level or even neighborhood-level, as some neighborhoods in parts of Loudoun, for example, may have held values better than some in some in South Arlington, in parts of DC, etc.
There may be, but to the extent that OP is trying to answer the question as to why some areas have held value better than others at least to this point, one would need to identify a net trend or factor favoring the former. I agree that, in predicting the future, one can't ignore a substitution effect.
I agree with the OP it's best to look at the zip-level or even neighborhood-level, as some neighborhoods in parts of Loudoun, for example, may have held values better than some in some in South Arlington, in parts of DC, etc.
I though Michgc did a pretty nice job trying to assess some broader trends. Beyond that, I agree that you have to get quite granular.
I though Michgc did a pretty nice job trying to assess some broader trends. Beyond that, I agree that you have to get quite granular.
I think it is helpful to have data wherever possible, controlling for various factors, when you want to predict. The first of the websites I mentioned did document (maybe 1-2 years ago), using all closed properties, some of the factors. While I agree with some of what michgc posted, as general observations, I don't entirely agree with others, based on data I have seen--and other factors could also be discussed. Further, in many specific instances, these observations don't hold. So when looking to buy a specific property, as OP is considering, it's best for buyers to either drill down to the specific neighborhoods that interest them or try to get more systematic data.
Thanks. I actually read some of those sites too. The NoVa housing bubble site can have some interesting information, but the comments generally devolve into ideological rants. That sort of thing appears to be less of a problem here. I had not heard the argument that Arlington County was run more efficiently.
Here is an older thread (see first post) that you may not have seen and that may be of interest to you:
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