The price of a newly built home in the Washington area is increasing at an annual rate of 18 percent, putting the average selling price now at $113,700, according to a local study realeased this week.
Part of the steep increase in the Washington area, which runs counter to the national trend, is attributable to near record jumps in prices for new homes in the District of Columbia. The opening of a number of high-priced luxury developments sent the average price of new homes in D.C. to more than $215,000 for an increase of $63,000, or 42 percent compared with prices one year ago.
The study was done by Housing Data Reports, a Bethesda-based research firm that surveyed 382 new developments with more than 10,000 new housing units built recently and put on the market this year.
The 18 percent increase amounts to $17,300 and does not include older homes resold in the real estate market.
In Farifax County, the average price of a new house was up 12 percent to $118,100, while in Montgomery County prices were up 15 percent to $129,100, the study showed.
"Prices have been very flat nation-wide, despite some ups and downs," said William Young, an economist with the National Association of Homebuilders, which reports the national cost increase figures. "But what happens in the rest of the country never seems to apply to Washington."
However, a recent study by the city's assessment office showed that selling prices for all single-family homes, new and old, have risen by only 6 percent this year to $99,694 -- the slowest rate of gain in more than a decade.
The difference in the increases between new homes and resale properties in the District can be attributed in part to the pressure of double-digit mortgage rates, which have kept many resale prices down, and to the large increases in the cost of new construction that builders have passed along to the purchasers of new homes, according to housing analysts.
Charles Horwitz, the District's assessment spervisor, noted that a study by his office of actual sales of new houses -- as opposed to prices -- showed an increase of 26 percent in the District, to $135,000, in July of this year over July, 1979.
Horwitz added that most of the 147 sales recorded this July were in areas of D.C. with much lower real estate prices, east of Rock Creek Park, in contrast to this week's Housing Data Reports survey, which included many of the most expensive new developments in Georgetown and nearby Northwest areas that are west of the park.
The lowest rate of increase for new homes in the area was in the Alexandria-Arlington area, where the average cost climbed only 7 percent to $138,200. The lowest-cost homes on the average were in Prince George's County, where prices rose 13 percent to $82,700, and in rural Prince William County where the average price was $79,900, up 9 percent from last year.
The high rate of inflation for new homes in the area is consistent with the trend of the last several years in the Washington market, said Bruce Steele, chief of housing programs for the Metropolitan Washington Council of Governments, which uses the Housing Data Report figures for its own studies.
"This is not an atypical situation for Washington," said Steele, who noted that this area remains the most expensive housing market in the nation outside of California. "This is pretty much business as usual."
The more surprising finding in the report, according to Steele and other experts who have studied it, was the 70 percent increase in new home sales this November over the same month last year.
The local real estate market plummeted in November 1979, with interest rates at 13 percent, noted Debbie Rosenstein, director of research for Housing Data Reports. But this year, with interest rates back up to 15 to 16 percent, families still are buying new homes, she pointed out.
Overall, 1,096 homes were sold last month in the area, compared with 645 in November last year.
"It's the fact that people have gotten so used to inflation in the economy, and there's a pent-up demand for new houses," said Steele. "People are now willing to radically alter the amount of income they'll devote to housing -- a set of expectations about high inflation has become built in."
The survey also showed that the price gap between jurisdictions widened in the last year. For example, the price increase was $16,800 in affluent Montgomery County, but in Prince George's -- where officials are struggling to encourage more high-priced development -- the average price rose $9,300.
"Clearly," the housing Data Report concluded, "the gap in housing between political jurisdictions is widening, and this will have profound effects on targeting markets in individual areas."