Montgomery Home Prices A 7-Figure Shock
Thursday, September 27, 2007
In a trend Montgomery County officials called shocking, the median price for a newly constructed single-family detached home in Montgomery rocketed to a record high of $1.13 million in the first quarter of this year, according to government data released yesterday.
The figure, up from $881,600 last year, underscores the escalating cost of new construction in the Washington region and is a troubling sign for officials seeking affordable housing solutions.
Although specific home sales data were not available for all jurisdictions in the region, it appears Montgomery has the area's most expensive new homes. The median price of new single-family homes in Fairfax County was $965,200 last month, according to county data.
In the District, the median sales price for single-family homes, the majority of which are existing, was $534,450 last month, according to the Greater Capital Area Association of Realtors.
Montgomery's new-construction home prices are soaring, county officials said, because developers are responding to the downturn in the housing market by focusing on building large, high-end homes for affluent buyers.
Karl Moritz, research chief of the Montgomery County Planning Board, which released the report, said the data show that construction of new middle-market homes has tapered.
"What we see when we look at the data, though, is not so much that all the houses are becoming more expensive, but that in the current market, builders stopped building middle-of-the-market houses," Moritz said. "What they continued to build was the most expensive."
Board Chairman Royce Hanson said the $1.1 million figure is "pretty startling."
"I don't know that we expected it would go over a million," Hanson said. "In 2006, it was just under $900,000, but this reflects a robust market in big houses. Single-family homes are tending to be larger."
The housing market across the nation has softened over the past two years, with median prices falling in many areas. The tightening in lending standards as a result of a rise in foreclosures has further weakened the market.
But experts said Montgomery has several factors that insulate it, such as a strong job market, proximity to downtown Washington, strong schools and a generally well-run government.
"It's a very competitive place, and there isn't as much land to build on, and so it's going to build at a high price," said Peter Morici, a University of Maryland economist who added that the $1.1 million figure is not surprising.