2 Legs Up With a 2nd Home
Whether for Vacations, Shorter Commutes Or Longer Visits, Pied-à-Terres Are Hot

By Tomoeh Murakami Tse
Washington Post Staff Writer
Saturday, April 15, 2006

Film producer Randy Auerbach just bought a one-bedroom condo in the District that will serve as an East Coast bookend to her pink cottage near Beverly Hills. Babak Fouladi, a George Washington University alumnus, added a condo in Northwest to go with his flat in London. And Mark Goode, head of an insurance investment company, is planning to buy something in Georgetown but is not quite ready to give up his place on Miami Beach.

What's going on? Isn't investing in real estate passé, so 2005?

Auerbach and the rest aren't speculators angling to make a quick profit amid a tapering housing boom. They are part of a growing group of second-home owners in a real estate market teeming with house-rich consumers and affluent baby boomers -- and they plan to use the properties themselves as pied-à-terres .

A pied-à-terre, French for foot on the ground, is usually a smallish home-away-from-home, owned by someone who wants a city place to live in part time.

About 3.34 million non-primary residences were sold nationwide last year, accounting for 40 percent of all homes sold, according to a report released last week by the National Association of Realtors. That's up from 36 percent in 2004 and 33 percent in 2003.

Vacation homes, for use primarily by their owners, made up a third of those second-home purchases. Generally, pied-à-terres would be lumped into this category. The rest were investment properties acquired mostly to generate rental income or diversify portfolios.

The market for the latter, most economists agree, will cool drastically in 2006 as interest rates tick up and the double-digit gains in home values seen in the past five years come to an end. On the other hand, David Lereah, chief economist for the trade group, and others say sales of vacation homes will remain strong, and possibly cushion market downturns. Vacation home sales were up 17 percent in 2005 from the previous year, to a record 1.02 million properties, the report said. The median price -- half cost more and the rest less -- for vacation homes was $204,100. For investment properties, it was $183,500.

"The vacation home market has a very powerful demographic tailwind," said Mark Zandi, chief economist of Economy.com.

Washington, of course, is hardly the vacation-home destination for out-of-towners in search of high surf or powdery snow. Still, some real estate agents say, suburban sprawl and urban revitalization have made pied-à-terres an increasingly attractive option for workers with long commutes or those who spend part of their week in the nation's capital.

Such second homes range from multimillion-dollar penthouses for the diplomat-and-executive set to bare-bones crash pads for young doctors, lobbyists or politicians with irregular work hours or families in different time zones.

Auerbach, a Washington native who moved to California 28 years ago, decided to purchase her second home around the corner from her father's house in the District after he became ill last fall.

Relatives called from Washington with real estate leads. She followed up when she was in town, either to see family or for research and development work for films. And after two months, Auerbach found a one-bedroom condo in a brick building near American University.

It wasn't anything fancy, worth about a third of her longtime home in L.A., with its outdoor deck and hot tub, which she values at more than $1 million. The condo features an electric stove, which Auerbach would not have tolerated had she been looking for a primary residence. But the apartment didn't need much updating, and no fuss was what Auerbach wanted in her pied-à-terre. There was no concierge service, but her family was close by. And the condo is on the second floor, which she felt would keep the place safe when she was away.

She liked that she could walk to movie theaters and restaurants, but also to parks and tree-shaded streets with deer-crossing signs.

"That's the beauty of D.C.," she said. "It's just perfect for my second place. It's made me realize how much I love the city."

A taste of the urban life, real estate agents said, is at the top of the list for many local second-home buyers.

"What people seem to want in pied-à-terres is proximity to entertainment, shopping and dining . . . or the potential for that in the future," said Jeff Sachse, of Coldwell Banker Residential Brokerage's Dupont Circle office.

Sachse and his business partner, Rick Quinones, said up to 20 percent of their business comes from pied-à-terres or from investment condos whose owners intend to use them as second homes in the future. Established neighborhoods such as Georgetown and Logan Circle are popular for the former, while the H Street corridor in Northeast has begun to attract people looking for future pied-à-terres , they said.

What Mark Goode mostly wanted was a peaceful place to come home to -- so far this month, he has traveled to France, Germany, Switzerland and Argentina.

"It's just nice not to have to pack and unpack, to be able to get off the plane and be in your own bed at night," said Goode, who used to stay in hotels during his twice-weekly trips to Washington. "While a hotel can be a nice luxury, it's not very restful."

So Goode, 45, whose primary residence is in Miami Beach, has been testing out a two-bedroom, 2 1/2 -bath unit in a condo building at 3303 Water St. NW in Georgetown. He spends an average of three nights a week there, and plans to buy it at the end of the year.

The location was a big draw -- it's just two blocks from the office of Secondary Life Capital, an insurance investment company he founded in 2004. Besides, Goode said, he has dreamed of living in Georgetown ever since he was stationed as a captain at the Marine Barracks in Southeast Washington in the early 1990s.

Like his high-rise condo on Miami Beach, the building is near the water and boasts spectacular views. Instead of the ocean, his D.C. home looks out to the river and Rosslyn skyline, while the rooftop pool offers views of the Washington Monument. He has an exercise room in the unit, where he works with his Pilates instructor when he is in town.

"It's very secure, and very hassle-free -- everything is taken care of," Goode said. "You can close the doors and leave for two weeks and not think about a thing."

Babak Fouladi of London spends less time in Washington -- about 10 weeks a year. But he became convinced that buying a second home here was a sound financial and lifestyle investment after seeing neighborhoods transform.

"Every time I come here, I see the city booming," said Fouladi, 37, an information technology director for Ericsson, the telecommunications company. "It makes more economical sense for me to actually have a house here. I really enjoy the new neighborhoods."

So he put money down on a $400,000 one-bedroom unit at 1010 Massachusetts Ave. NW, scheduled for delivery next year. It's a neighborhood, Fouladi said, that didn't exist when he was a student at George Washington, from which he graduated in 1993.

Fouladi and his wife, a fashion designer who also travels to Washington on business, want to give the condo a modern decor -- something different from their two-bedroom, pre-World War II flat in London. And when it is finished, Fouladi looks forward to spending weekends here, too, instead of rushing to the airport after Friday meetings.

"I really want to make this city my second home," he said.