Real estate insights: Part 1
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This 2,340-square foot house on Donna Circle in Broyhill Crest is on the market for $442,900. It has three bedrooms and two bathrooms. [Zillow]
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How quickly are homes selling? Why does one house sell faster or for more money than a similar house on the same street? Is house flipping on the increase? Is it a buyer’s market? A seller’s market? What does all that mean anyway?
In an effort to sort through some of these issues, we’re running a two-part series presented in a question-and-answer format by Kate Fulling, a resident of the Columbia Pines neighborhood in Annandale and the editor of a blog documenting her home improvement projects.
Fulling posed her questions to realtor Vivianne Couts, a resident of Broyhill Crest who occasionally contributes real estate updates to the Annandale Blog. [It should be noted that the questions and responses specifically relate to single-family homes in Columbia Pines, Broyhill Crest, and Sleepy Hollow Woods.]
Kate Fulling: It appears that the real estate market in the 22003 zip code (Annandale) has softened a bit in the last six months. The number of sales per month and the price per square foot in the last six months of 2015 seem down from where they were in the first six months of last year. Do you agree with that assessment, and if so, why do you think that is?
Vivianne Couts: The real estate market did slow down in the fall of 2015. Usually it picks up right after Labor Day. This year, it didn’t pick up until October.
I think there was a bit of nervousness in the market. The federal government changed some of the rules that lenders had to follow, and interest rates were a concern for people, even though they’re hovering around 4 percent. The market was stronger than usual in November and December and continues to be good right now.
However, the declining stock market is going to hurt some investors who need to sell stocks to come up with a down payment on a house. On the other hand, many buyers have very little money in the market, so this won’t hurt them. Also, there is a correlation between the stock market and interest rates. A bad stock market means good interest rates.
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This rebuilt and renovated house on Wayne Drive in Broyhill Crest is 3,100
square feet and has six bedrooms and four bathrooms. The asking price is $759,990. [Zillow] |
KF: Some homes in this neighborhood sell right away, while others languish on the market for months, even though they seem to be the same size and in the same condition. Is this simply a function of price or are there other factors?
VC: Pictures lie. Two houses can look exactly the same in pictures, but when you get inside you can see shoddy work, or bad taste, or the pictures don’t show what’s really going on. Also, seemingly small variations in house sizes make a huge difference.
In the original Broyhill Crest, there are three different-sized homes, 910, 1,040, and 1,170 square feet. Of course, there are other variations where people have put on additions or made other improvements. But the difference in size between a 1,040 and 1,170-square foot house makes a huge difference. The smaller house has a smaller kitchen, for example. So the 1,170 square foot house is priced higher.
Our neighborhoods are very hilly which can make a huge difference in house value. Most buyers would pay more for a flat backyard than one with a hill. Also not having a driveway detracts from a house’s value. There are some homes in Broyhill Crest and Columbia Pines that don’t have driveways, especially if they’re on a cul de sac. I recently sold one on Ridge Road that didn’t have one.
KF: What’s more important, size or number of bedrooms? For example, is a two-bedroom 1,300-square foot house worth more than a 1,100-square foot house with three bedrooms?
VC: Overall size is more important than number of bedrooms. It’s pretty easy to convert a two-bedroom house in this neighborhood to a three-bedroom house.
KF: Another topic that gets a lot of attention at neighborhood get-togethers is house flipping. Several homes that recently turned over had been bought by investors who made a few improvements then sold them for a quick profit.
How prevalent would you say flipping is in this area compared with Arlington, Alexandria, Falls Church, or other areas of Fairfax County? Is this trend on the upswing? And while a lot of flippers in Arlington and Bethesda tear down houses to build larger ones, most flippers here seem to be just interested in remodeling the existing home before re-selling it.
VC: This area seems to have an average number of flips compared to the region as a whole. In most cases it makes more sense to fix up a house rather than tear it down. The critical price point seems to be $390,000; it doesn’t make economic sense to tear down a house valued above that level.
In most cases our area doesn’t support tearing down, as the cost to build a house is the same whether it’s in McLean or Annandale. The difference is in the land. For more insights on the economics of house flipping and the thin margin for errors, see the Jan. 11 article in the Washington Post by Justin Pierce.
I don’t think we have seen more flips in the last year. I think people know if they want to get top dollar for their house it has to look good. Also, some houses that have been rentals for a while tend to be renovated before being put on the market. In other cases, the homeowner did the renovations prior to listing it.
Good insight, neat info. I'm very interested in trends between list price and sale price. Seems like there are pockets of homes being listed considerably above market, how often do they close anywhere near that? What's the correlation between time on the market and average %age above median home sale price?
Thanks for doing this.
Actually, I notice condition is the prime driver of price points. People will pay for a live-in ready home that has had renovations done. Those sometimes sell over or at list. Those with condition issues will sit. But overdoing like many flippers do with poor quality and subjective taste can also cause a property to sit.
I will send Ellie info on list price to sales price by neighborhood. Perhaps she can incorporate it into another article.
We recently bought a home in 22003 instead of a flip in Falls Church. The flip was still on the south side of Rt. 50, and the developer wouldn't go much below his list price even though similar homes were cheaper in that neighborhood. Plus you could tell the flipper had cut some corners on the improvement…I suspect a thorough inspection would have revealed more problems. The house we bought in Annandale was much more affordable, however, it does need some updates. But at least we can hire reputable contractors and make sure the work is done properly.
We moved from East Falls Church. Any house older than 1985 that goes on the market is torn down and replaced with a McMansion that go for north of $1.25 million. Same as in Vienna. Clearly, the old adage of "location, location, location" holds true.
Very similar to our decision, we opted for an older house in 22003 instead of a flip in West Falls Church south of 50. The flip was nice (especially kitchen) but who knows whats behind the brand new drywalls. We don't regret our decision at all since we have more space to play with and more land to expand if we ever need. Our brick house is super well built and as you said, our small renovation projects are top notch as we are the ones who will be enjoying them for the next couple of years. Our 20-25 min commute to work (in different directions) is unbeatable and worth every penny!
Excellent post and insights! Another interesting topics would be:
1. The impact of the new developments around our area in the medium/long term (Mosaic 2, Markham, Inova center, Landmark…). Look around uson the map, everything is happening around Annandale at first. It looks like downtown Annandale has potential to be next.
2. Driving through Vienna/Falls Church last year I was impressed with the number of houses being built/flipped. It seems like once these (richer) areas reach a development "ceiling" the areas south of Falls Church will become more attractive for developers, especially given the excellent location and the lots being generally bigger than in other areas (R3 zoning), in addition to the fact that the neighborhoods are already well established.
3. New families in our area in the last 3-5 years. Look around an you will see our demographics are radically changing.
I am very optimistic about the real estate in this area in the next 5-10 years and this might be possibly a very good time (last chance?) for new working families to settle in a great location near the beltway with low interest rates and potential for medium/long term gains. Only time will tell.
Thanks again for your dedication, Ellie!
11:17 I agree with Para 3 and 4. I've seen many DINKS (DUEL INCOME, NO KIDS) move inside the beltway and start a family.
what's not to love, lot's of sidewalks, playgrounds, parks, easy mid-day access to museums to name a few.
Where I see them move "out and up" is when the kids are ready for school (no surprise, overcrowded). By then parents are beginning to smell the coffee; can't get playdate's cause so many neighbors don't have stay at home parents or nannies and few real entertainment activities unless you are willing to drive all over the county(our Rec center is the worst, see related story on the blog).
I provide childhood enrichment in Falls Church and Arlington, where families can afford to find someone who stimulates their little ones, not just sits them in front of a TV or video game.
If we could attract more upper middle class families, Mason District could be Shangri-La.
No slight against your profession, but I always thought it was the job of the parent to enrich their kids. I know you aren't saying this, but I do get a bit weary of people blaming schools for their children's ills. Last I checked you and your teachers were equal partners in ensuring your kid didn't grow up to be a little turd. When my family eventually moves out of Mason, it'll be because we want to live on some land with some distance between us and our neighbors, not because I couldn't find a tier A elementary school to coddle my kid.
Adam,
I can die happy now. You replied to my comment without rancor; I'm honored!
yeah apologies if it came across as being snippy at you, was not my intent, just tired of other people's constant assault on our area schools
before the fit hits the shan, upper-middle class is a socio-economic group that MOST people in the US identify with.
It transcends race, color, creed, gender and sexual orientation. It's based on values; "endowed by our creator with certain inalienable rights … among these are life (Right of people to bear arms not to be infringed), liberty (Freedom of religion, speech, of the press, and right of petition) (Persons and houses to be secure from unreasonable searches and seizures) and the pursuit of happiness (achievement)
Thank you ALL for some great posts. This kind of discussion is so very worthwhile and great to read. And no, this is not Ellie.