Post-Boom House Price Dynamics (Arlington, McLean: top neighborhoods, apartment, HOA)

[CAVA1990]

Don't count the Eastern side of Fairfax County out. There are a lot of jobs going into Fort Belvoir and over time people in them or who will be will want to live closer.

[rome99]

I have been looking a new town house in Ashburn area for the past couple of weeks. What I have observed is that most of the builders are having hard time to sell houses. It's moving but not that fast.

[boyd888]

Originally Posted by PSUinNoVa

That is interesting. Any anecdotes for why people and money are moving further west? Is there something similar in Loudoun County, or are all of these movers heading east to work in the morning?

People want homes, and in the mid 200s the McMansion was the house to have. A place in Arlington might cost 800K, but in Loudon/PW the same home new construction could be had for in the 400s. Many people were priced out of the closer counties due to the bubble or perhaps just wanted to live in a more suburban area and didn't mind the drive.

A very high percentage of people commute east from out there in the morning - ask anyone that sits on the route 66 parking lot every day.

[NC211]

Rome, it's actually just the opposite out here, of you're in the right price point for delivery. I recently attended a private meeting regarding how the residential builders are doing in the DC market in general. Loudoun is the tightest market in the country by a good margin. Not a surprise to anyone. What did catch my attention were a few historical numbers against current numbers. During the boom (04/06) you had a tough time entering the Ashburn submarket on a new home for under $950k / $1M. Now, post boom and several years into the recession, that number has dropped to magical ceiling of $600k. If you are a developer in Loudoun County, you are facing a developable lot inventory of less than 12 month supply. That is impressive! But, if you're over $600k for your market delivery of a new home, there is 5 years worth of developable lot inventory. The homes from the boom were around 5,000+ square footage. Today, they're around 4,000 +\-. That being said - my neighborhood which is in that $550,000 - $585,000 single family range is just starting on phase 2 of what will ultimately be around 60 homes.
They can't build them fast enough to keep up with demand.
Two spec homes recently delivered. Sold within 5 days at 98% of asking price.
Rumor has it, they're already selling lots on phase two as they're cutting the curbs now.

The trick to buying in this area to preserve your value is the views. Mountain views are like culdesacs. If you can get one, especially right now at these prices of $140 per square foot averages, you're set to ride the next wave. The other trick is the government cheese. FHA financing, while it has it's added costs to acquire, is the only private sector financing that allows the mortgage to be transferred for a small fee ($500). 3.75% money that covers say 90% of the sales price in a few years, when normal market rates are back to the 6-8% range, is an ace in the hole. You actually create value with your debt. It becomes about spending power. As an example: Buy this house with a $3,500 payment that's worth $620,000 with 4,200
Square feet, or buy that one that is worth $500,000 with 2,900 square feet for the same monthly payment. Plus, not to mention, the life of the transferable nature of the mortgage isn't limited to just one time!

In my own personal opinion, there is no better improvement a home owner can make to their house to preserve its value than finding a way to lock these kind of rates to the actual property itself. Those who have this feature, will ultimately dominate the resale market in a few years when rates go up. I wouldn't be surprised one bit if the appraisal community ends up adding value adjustments for this at that time. Don't assign the rate to the borrower, assign it to the property! Let the "owner" be the variable factor in the equation, not the interest rate. In my opinion.

[cdmurphy]

Originally Posted by rome99

I have been looking a new town house in Ashburn area for the past couple of weeks. What I have observed is that most of the builders are having hard time to sell houses. It's moving but not that fast.

Not in Brambleton. They sold 352 new homes in 2010, and 454 new homes in 2011. Brambleton was #6 on the list of top-selling master planned communities in the U.S. last year. That's six different builders, with quite a range of townhouse and detached home models.

[Teebyrd86]

Originally Posted by cdmurphy

Not in Brambleton. They sold 352 new homes in 2010, and 454 new homes in 2011. Brambleton was #6 on the list of top-selling master planned communities in the U.S. last year. That's six different builders, with quite a range of townhouse and detached home models.

you mean people want to move way out here? LOL sorry couldnt help it

[Caladium]

Originally Posted by NC211

Mountain views are like culdesacs.

LOL, very true. And amusingly, these days the reverse is true too: cul de sacs are like mountain views. Now that they aren't building them anymore, they're becoming more and more desired.

[PSUinNoVa]

I am renting in a part of Northern Arlington where these teardowns are occurring frequently. 0.1 to 0.2-acre lots/teardown properties have been selling for between 500k and 600k! Also, I should emphasize that my neighborhood is about 2 miles from the metro and is not located near any of the popular urban villages of Arlington.

I know that McLean has good schools, but I really get the impression that there is just a lot of hype to the whole McLean "brand." The neighborhoods up there with the huge mansions are certainly impressive. The homes value from 700k up to 1 mil, on the other hand, are shockingly ordinary. Until I moved here, I had no idea that there were people willing to buy outdated ramblers and split-levels in the suburbs for 800k bucks.

Originally Posted by JEB77

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.

[Caladium]

Originally Posted by PSUinNoVa

I know that McLean has good schools, but I really get the impression that there is just a lot of hype to the whole McLean "brand."

I never understood the big deal that some people make about McLean, but there are plenty of people who swear it's the best place to live in Nova. Different strokes for different folks, as they say. I like McLean but some of the other nearby communities seem more appealing to me.

[PSUinNoVa]

Thanks. Like the analysis from the Washington Post above, these folks are trying to measure price dynamics using median sales prices, which just doesn't make any sense; any simple measure of the distribution of sales prices will confound true price movements with changes in quality.

For instance, according to the poster on that site, the "price gains" (based on median sales prices) between 2000 and 2010 in Loudoun and Prince William Counties were around 75% . From what I have read in this thread, it sounds like these two parts of the metro area are where the McMansions were being constructed at a rapid rate during the housing boom. Since both areas had a relatively small housing stock to start with, the McMansion craze likely increased the average quality of housing in these counties. Even if prices remained totally flat, the sale of these higher-quality homes would make it look like prices are rising. The Zillow price index-- which does attempt to control for quality changes over time-- indicates that between 2002 (the first year available for the zillow index) and the end of the 2011, prices rose by 33% in Prince William County and 42% in Loudoun County, a far cry from the 75% appreciation rates implied be analyzing sales data.

Originally Posted by ACWhite

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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