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Question: Why are there no new big condo projects coming? All of the major announcements such as the old Macy’s Furniture plat, the Mazda dealership plat and the bar at Quincy and Fairfax Drive are going to be apartments.
You’re right; we’ve seen a ton of large apartment projects recently and in future plans. Just around the corner from where I live in Rosslyn, we’ve added about 1,000 new apartment units in the last 2 years at Slate & Sedona, 1919 Clarendon, and 2001 Clarendon, but zero new condos.
Why? Here are some reasons building an apartment complex has been a popular choice (although, I believe that’s changing, hence the growing list of new condo projects) in recent years:
According to WAPO, over 27% of Arlingtonians are age 25-34 and they’re not buying homes just because their parents did, but comfortable renting until they’re sure it’s the right decision for them. I think a lot of this has to do with job-hopping every couple of years and Fannie Mae making it more difficult for those with less savings and shorter credit history to get a mortgage.
However, Millenials are having kids and finding more value in settling down with an employer and, according to Jake Ryon with First Home Mortgage, Fannie is “making it much easier to become a homeowner by reducing down payment requirements from 10% to 5% on loans of $417,000-$625,500 and to 3% for loans under $417,000.” These two shifts are resulting in an increase in the number of new condo projects in Arlington.
I’d love to see new condo projects include family-friendly amenities like indoor/outdoor playgrounds, day-care centers, and game rooms like buildings I’ve seen in NYC.
I’d also argue that when a developer chooses an apartment project, they have some very savvy people determining that Arlington is a great long-term investment and they’ll fare better generating long-term income here than quickly flipping their project to homeowners.
Something else to consider is the condo conversion strategy where a developer may find it more lucrative (and easier, due to looser building codes) to build an apartment now, generate solid income returns while rental rates are at all-time highs, and convert to a condo building when the time is right. There are many examples of this such as 38 Place and Arc 3409 more recently and Prospect House in the 80s.
I’d be remiss not to acknowledge the transient nature of our population, relative to most other cities. With so much of our population being made up of short(er)-term/contract employees and grad students, we have an extraordinarily high demand for rentals.
Where Should They Build?
I think Cherrydale, Columbia Pike, and Rosslyn are primed for new condo construction. What neighborhoods would you like to see new condo construction instead of apartments?