Condos Remain More Affordable
By Barbara Ruben
Special to The Washington Post
Thursday, April 27, 2006
Northern Virginia is home to some of the region's most expensive single-family houses and townhouses.
The median sale price of a single-family house or townhouse in the Virginia suburbs in 2005 was $491,447, up more than $100,000 -- 26 percent -- from 2004, according to a Washington Post analysis of government records around the region.
Condominium prices in Northern Virginia appreciated even more quickly last year, rising 31.1 percent, to $308,000. The median is the point at which half the sales were more expensive and half less.
Alexandria was Northern Virginia's highest-priced jurisdiction in 2005, with a median sales price of $585,000. Prices in Alexandria increased 17.2 percent -- the slowest appreciation in the Washington area, but still astronomical by historical standards.
Conversely, Prince William County's $398,000 median price was the lowest in Northern Virginia but reflected the region's highest growth from 2004 -- 32.7 percent.
Arlington sales prices rose 23.9 percent, to a median of $570,000.
In Fairfax County, the region's largest jurisdiction, prices were up 26.5 percent, to $529,900. Prices in neighboring Loudoun rose at the same rate, reaching $535,000.
But there are pockets of lower-cost housing throughout Northern Virginia. In Arlington, look near Baileys Crossroads, suggested Luis Lama, president-elect of the Northern Virginia Association of Realtors and an agent with Long & Foster in Falls Church.
"These are older homes, and there are some good buys because of their location, but the houses need some help. But an owner can repair and renovate," he said.
Reston, Chantilly and Herndon also offer good values, Lama said.
Betty Holmes, managing broker with Weichert Realtors' Vienna-Oakton office, recommends Pimmit Hills, right inside the Beltway near Tysons Corner. The community's modest houses, built a few years after World War II, are priced at less than $500,000.
"Pimmit Hills is still a reasonable area inside the Beltway. In the past, I think it was in the lower range and kind of overlooked. But it's a good location and school system," Holmes said.
There is other good news on the affordability front, according to a number of real estate agents. Condos, the object of fierce bidding wars just a year ago, are coming down in price. With more condos being built and apartments being converted to condos, supply is outstripping demand.
Holmes agrees that condos can offer good value. Now that there are more of them on the market, buyers who once thought their only choice might be in Woodbridge or Sterling are finding that asking prices in Fairfax County have started to come down, she said.
Michael Turk, managing broker with Weichert's Old Town Alexandria office, said that one-bedroom, one-bath condos are available starting at $165,000 in the city of Alexandria.
"What's remarkable and unique about Alexandria is an abundance of condos in price ranges for any type, from the mid-$100s to the sky's the limit. That's very different from most jurisdictions," he said.
In a quick search of condos for sale in Alexandria, Turk found more than 150 priced at $300,000 or less.
Turk also recommends trying the Route 1 corridor in Fairfax County, an area he says is being redeveloped and deserves a second look from buyers.
Virginia's ever-skyrocketing housing prices were mirrored across the region last year.
As housing prices rose during 2005, fewer places could be deemed "affordable." In the Washington area, stretching from southern Maryland northwest to Loudoun County and northeast to Frederick County, the median price of a single-family house or townhouse in 2005 was $419,000, up from $330,000 just a year before.
Although the median price in the District was $412,000, well below Northern Virginia's, the city had the fastest rate of appreciation, 28.8 percent. In suburban Maryland, the median price of a single-family house or townhouse was lower, $337,350, after rising 24.9 percent in 2005.
Condo prices remain considerably lower than house prices, but they rose more steeply, to gain 33.8 percent regionwide in 2005, for a median price of $281,000.
The District, where there has been a boom in luxury buildings, led the region in condo prices, with a median price of $365,750. The median sales price for condos in Northern Virginia was $308,000; in suburban Maryland, it was $210,000.
If current sales prices leave you with sticker shock, Lama, the Long & Foster agent, suggests you ratchet down your expectations a little: Don't look for a house near public transportation. Think about a fixer-upper. Consider whether you can live without a basement or a garage.
"If you want to live by transit, forget it: You don't find anything under $500,000," he said.
Janice Fife, an agent with Weichert in Silver Spring, said that in some cases a fixer-upper might be the best bet to get the most for your money.
"There are a lot of people paying for their houses in sweat equity," she said. "Ironically, they go in, fix the house up, making the neighborhood all the more unaffordable."
Weichert's Turk said that "new property availability across the board has helped affordability. In many areas, because inventories have increased, buyers are getting their dream townhome and not having to put in an escalation clause." In the hottest days of the real estate market, buyers commonly included such clauses in contracts, committing them to raise their offering price if there were competing bids.
Said Weichert's Holmes: "People are coming back and revisiting homes again. People now have time to step back and say, 'What trade-offs am I willing to make?' "
Adjustable-rate mortgages and interest-only loans -- which require the buyer to pay only interest and none of the principal, thus bringing down monthly payments -- also mean that buyers may be able to afford more house than they could under a traditional 30-year, fixed-rate mortgage, Lama said.
"Financing plays a very important role in affordability. If you understand how the loans work, understand the risks, then you may be able to buy a house where you thought the prices were out of your range," he said.
But agents offer some caveats.
Think twice about interest-only loans if you're planning on staying in the house more than five years, Turk cautioned.
Fife worries that some buyers, feeling priced out of a neighborhood, have taken on more debt than they should, and if the huge price increases of the last five years suddenly come to a standstill, they will be left owing more than their house is worth.
"You have to realize you are not going to have 25 percent appreciation forever," she said. "And while that will be good for buyers, sellers with no equity may be hurt."
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