Construction and sales of new houses in D.C. area are rising

March 21, 2014

Construction and sales of new houses in the Washington region have rebounded since the Great Recession, when activity slowed considerably, and analysts are expecting both to continue rising this year.

Single-family houses, condos and townhouses are popping up from Prince William County to Prince George’s County and from Loudoun County to the District.

The number of building permits for single-family houses issued in the Washington region has been rising steadily since 2009, when they plunged to 8,954, according to the Census Bureau. Last year, 13,277 building permits were issued — a 20.91 percent increase from 2012.

New home sales in the region climbed 10 percent from 2012 to 2013, according to Dan Fulton, senior vice president of John Burns Real Estate Consulting in Reston. That’s higher than the 7 percent increase from 2011 to 2013.

Fulton said he expects that trajectory to continue, with sales increasing about 15 percent this year.

“The new home market took a hit from the weather over the past few months, which slowed production, and November of last year was also kind of a lost month because of the combined impact of the government shutdown, sequestration and defense spending cutbacks,” Fulton says. “But sales rebounded in December and are on track to increase this year, especially in Northern Virginia.”

Construction activity is even increasing in the District, where land is scarce. The number of building permits for single-family houses in D.C. rose 22 percent — to 333 last year from 271 in 2012. Some of the new home communities in the city include the Hampshires, Dakota Crossing and Chancellor’s Row — all in Northeast.

Clearly, though, much of the action is occurring in the suburbs.

Some of the larger developments under construction in Northern Virginia include:

●Potomac Shores, a planned community along the Potomac River in southern Prince William County. “Potomac Shores will have some high-density development around a marina and then larger single-family homes closer to I-95 and Route 1,” Fulton says. “NV Homes and Ryan are building single-family homes and pushing up prices there to the $800,000s, which is the highest we’ve seen in that part of the region.”

●Embrey Mill, a planned community in Stafford, is unusual for that area because it’s a “TND,” or traditional neighborhood development, with features such as rear-access garages and houses that are designed closer together and to the street to encourage walking and neighborhood interaction. “Newland Communities is the developer, and they’ve already opened some of the amenities such as the swimming pool and clubhouse there,” Fulton says. “The builders have created unique new designs for the community, which makes it stand out from the single-family home subdivisions that are usually in that location.”

Fulton says that three communities in Loudoun County are among the top 50 best new developments in the country, according to the John Burns Real Estate Consulting list, including Stone Ridge, Brambleton and One Loudoun.

“Willowsford has been nationally recognized as community of the year, so Loudoun County is really the land of well-developed planned communities,” Fulton says. “One new trend we’re seeing at Willowsford is the development of large single-family homes on one level with a finished basement which are targeted to empty-nesters who don’t want a condo and don’t want to live in an active adult community.”

The county’s popularity is reflected in its growth in building permits. Last year, 3,541 building permits were issued in Loudoun, according to a preliminary report from the Census Bureau, an 18 percent increase from 2012. The 2013 number is a substantial improvement over the 1,468 permits issued in 2008 but still lower than the 5,678 in 2003.

“We don’t anticipate [the number of permits] will get as high as 2003. It will be stable because of the restricted use of land,” said Jill Kaneff, a demographer for the Loudoun County planning department. The big difference between 2003 and now is that “townhomes are being developed at a higher amount than detached” houses, a trend that has accelerated since 2011, Kaneff said.

The higher-density development and redevelopment is taking place in the Mosaic District in Fairfax, Tysons Corner and along Route 1 outside the Beltway, Fulton says. Some condos and townhouses are available in these areas now, but Fulton says this type of development will continue to grow over the next decade.

In Maryland, Robert Kaufman, vice president of government affairs for the Maryland-National Capital Building Industry Association, says new home construction “is probably 60 percent of what it used to be, but that’s more because of the limited land supply rather than demand. We’re seeing more national builders like KB Home, M/I Homes, Beazer and Pulte Homes coming into the area and buying land because they have the capital to make big purchases.”

Fulton says that new home construction is lagging in Maryland compared with Northern Virginia and has been slow in Prince George’s County because residents there have federal government and defense-related jobs.

“The uncertainty around the government has slowed the housing market in that area more than others, because even though there are plenty of federal workers in Northern Virginia, there are also a lot of private employers that add stability,” Fulton says.

Kaufman says Prince George’s County is poised for residential development now that the schools are improving and crime is going down. Some of the new communities in Prince George’s County coming online include:

●Westphalia, a planned community in Upper Marlboro under development by the Walton Group, will include single-family houses, townhouses and condos. The Westphalia Town Center is under construction now and is designed as a “live/work/play/shop” location to appeal to young families and empty-nesters, Kaufman says.

●Two Rivers in Crofton is the first large-scale active adult community in the D.C. area to be developed in recent years, Fulton says. Classic Communities is building 2,000 homes at Two Rivers, with models expected to open later this spring.

●National Harbor has townhouses under construction along with apartments and condominiums, Fulton says.

In Montgomery County, the most extensive development is taking place in Clarksburg, but there’s also interest in high-density, transit-oriented developments in Bethesda and around the Metro stations, Fulton says.

“The Silver Line is a game changer for Northern Virginia, where you’ll see possibly as many as 100,000 new homes built over the next decade,” Kaufman says. “In Montgomery County, you’ll be lucky to get 2,000 or 3,000 [annually] new homes because the taxes and fees are so high that developers have to make a huge upfront investment.”

Michele Lerner is a freelance writer.

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