New-home opportunities available for buyers willing to wait

If you’re interested in buying a newly constructed house in the Washington region, you’ll find plenty of options in a variety of price ranges.

Just be prepared for a long wait — there may be few move-in-ready options this spring.

“There’s definitely a lot of building going on, but builders are being a little more cautious and avoiding getting ahead of buyers,” says Ben Sage, director of the Mid-Atlantic region of Metrostudy, a Hanley Wood company in Chantilly, Va. “Builders were optimistic in 2014, but they found that the demand wasn’t what they thought it would be.”

Still, across the country, buyers’ appetite for newly constructed housing is growing. In a report issued this week, new-home sales rose 7.8 percent in February to 539,000, representing an 84-month high.

As with all real estate in the region, the level of new home construction depends on location. Construction of more condo and single-family-home developments is beginning to emerge in the city and inside the Beltway in close-in suburbs.

Some high-profile condo projects in the city — which have already begun selling units — will have models ready for viewing this spring.

“Two-thirds of the homes at 460 New York Avenue have been presold, and the building should be ready sometime this spring,” says Christopher Ballard, co-founder and principal of McWilliams Ballard in Alexandria. “Ontario 17, the redevelopment of the old theater in Adams Morgan, will also be complete this spring, and so will the Atlantic Plumbing building at 2030 Eighth Street.”

Ballard says the recent cycle of development in the city includes high-end properties as well as smaller condos designed for first-time buyers.

“What’s different in development now is that we’re seeing buyers willing to pay a premium for good design,” he says. “Everyone is raising their game because people in D.C. are well-informed, and they know about design, construction and different products. We’re seeing designers come here from New York and Miami who are starting to influence the city.”

In Northern Virginia, many of the luxury townhouses — such as Rosslyn Commons in Arlington and at Eleven Oaks in Fairfax City by Madison Homes — include an elevator as a standard feature to attract empty nesters, Ballard says.

Most developments in the close-in markets tend to be priced on the high end.

“One trend we’re seeing is that the tear-down business is continuing to boom, especially in the city but also in close-in suburbs,” says Dan Fulton, senior vice president of John Burns Real Estate Consulting in Reston, Va. “In areas like southeastern Vienna and Pimmit Hills in Falls Church where you can find 1950s homes on large square lots, builders are typically tearing down the house and putting up a more-expensive home in order to cover the cost of the tear-down plus the construction.”

Sage says residential developers are unearthing opportunities even in high-density areas, but the new houses carry a high price per square foot.

In addition to those pockets of new developments — which Fulton says are common in Bethesda and Silver Spring, Md., as well as Northern Virginia — some larger communities are being built inside the Beltway.

For example, in Northern Virginia, Stanley Martin Homes plans to build 28 single-family houses at Manor Ridge in Falls Church and 77 townhouses at Ambrose Hills in Baileys Crossroads. Both of those communities are expected to have homes ready for residents in August or September.

M/I Homes has plans for townhouses at Westpark in Alexandria, and NVHomes has already sold out its first phase of townhouses at Pike 3400 in Arlington. The next phase of townhouses at Pike 3400 are expected to be ready in the fourth quarter of this year.

“Another trend we’re seeing is repurposed office buildings, such as EYA’s transformation at the Oronoco [in Alexandria] and some condos in the city,” Fulton says.

In Maryland, Sage says some of the larger new developments where buyers can find new homes include Wincopia Farms in Laurel, where Beazer, Pulte and NVHomes are building single-family homes and townhouses.

“Laurel is a hot spot right now because of its location within commuting distance of both D.C. and Baltimore, and it’s right where Howard, Anne Arundel and Prince George’s County meet,” Sage says. “In addition to Wincopia Farms, Beazer is building single-family homes and townhomes at High Ridge Meadows, and M/I Homes is building townhomes at Walden Woods active adult community.”

Beazer’s homes at High Ridge Meadows are expected to be ready for residents in September.

Sage says that new homes are planned for Prince George’s but that the lingering effects of the recession and predatory lending have slowed building there.

“There’s been lots of effort to acquire land and get development approved in Prince George’s County so there’s potential for a lot of residential development in the future,” he says. “The Westphalia development is just getting started, but eventually that will be a huge walkable community with a town center.”

Homes for first-time buyers

While the perception may be that newly constructed houses are primarily designed for move-up buyers, builders are also offering properties geared toward first-time buyers.

“We’ve been talking about this for a little while, but now some micro-units, such as studio units with less than 400 square feet, are coming on the market in the city that are more affordable for first-time buyers,” Ballard says. “We had 108 people show up to the first open house at Cambridge Row at 1208 G St. SE, near the Potomac Avenue Metro station. The homes there have very efficient floor plans, and prices start in the $200,000s for the studios.”

Ballard says small units at Ontario 17 in Adams Morgan are priced from the $270,000s, which makes the monthly comparable to many rentals. He says that some new developments in the Capitol Hill East neighborhood are priced from the $300,000s and that new buildings such as 3205 Georgia Ave. NW, where the condos are move-in ready now, are priced to attract first-time buyers.

“A critical element for first-time buyers is job growth, and since the job market has been slow, builders have been slow to introduce products for first-time buyers,” Fulton says. “There are some exceptions, though, such as Bradley Square in Manassas, where Stanley Martin is building townhouses and single-family homes oriented toward first-time buyers.”

Fulton says Mid-Atlantic Builders is constructing townhouses at Westphalia in Upper Marlboro, Md., that are designed for first-time buyers and single-family houses for buyers making their first move into a larger home.

He says Brambleton in Loudoun County also offers a wide range of townhouses in a variety of styles that are attractive to first-time buyers. In Leesburg, the townhouses at Crescent Place from Knutson Cos. and Ryan Homes are expected to be affordable for first-time buyers and appealing because they’re part of a walkable neighborhood with shops and restaurants. The first move-ins at Crescent Place are expected to take place in October.

Fulton expects that the new-house market will pick up significantly in the next year or so because buyers are frustrated by the low supply of existing houses for sale.

For buyers, this means that if they can wait the six to nine months that it takes to build a house they may be able to avoid the aggravation of a fruitless search for a resale.

 

http://www.washingtonpost.com/realestate/new-home-opportunities-available-for-buyers-willing-to-wait/2015/03/26/da88b17c-b20d-11e4-827f-93f454140e2b_story.html