Question: We are deciding between buying a lot to build a new house on or expanding and remodeling our current home. Do you have a recommendation for a lender who can finance these projects?
Answer: Over the years, I’ve found that one of the best banks for construction or major remodeling loans, and a favorite amongst local builders, is Sandy Spring Bank. They are large enough to offer some excellent, customized products with great rates and local enough that relationships with builders and homeowners matter to the success of their business. That’s usually a good combination for a business, especially lenders.
I have worked with Skip Clasper (email@example.com), a loan officer at Sandy Spring Bank, for years so I reached out to him to gather up some details on their popular construction and remodel loan products.
Sandy Spring Bank will give you a loan to finance the cost of your remodeling project based on the expected post-construction value of your home. Given how high market values are now, that means you can get a significant amount of financing to expand and remodel your home.
There are a few things that stand-out about the way Sandy Spring Bank handles these loans:
They offer 90% loan-to-value (LTV), meaning you can get financing for 90% of the future value of your completed home. Most banks limit their loans to an 80% LTV.
They accommodate a flexible draw schedule. Banks give borrowers/builders draws to pay for construction incrementally as the project progresses. Many banks offer their draws on a fixed schedule, but given the unexpected twists and turns construction can take, a flexible draw schedule makes for a better process for everybody.
You only pay interest on the money you have drawn from the loan so you only pay interest on the money you’ve used, not the money you will use
Interest rates are competitive with rates you will find on standard, non-construction loans. This is noteworthy because oftentimes specialized loan products require paying higher interest rates.
A construction loan allows buyers more control over building a new home because it allows you to finance the purchase of the lot and construction yourself. That means you can purchase the lot you want (easier said than done) and choose the builder you work with, as opposed to hoping that the builder who acquires a lot you like is also a builder you want to work with.
Here are some highlights and key pieces of information about the Sandy Spring Bank construction loans:
You can purchase a tear-down/lot and finance the construction of your home with a single closing. After closing on the tear-down/lot, they will finance the construction, and then the loan will automatically convert into a permanent 30-year loan after the construction is completed.
The loan is interest-only until construction is completed, making your payments during the construction phase much lower
Sandy Spring allows cross-collateralization on construction loans, meaning they will include equity in your current home towards your future down payment when considering your loan application/qualifications for your construction loan
It will take 6-8+ weeks to finalize the loan on your tear-down/lot purchase, which may put you at a disadvantage in some cases if you are competing against buyers or builders who are paying cash or using a standard loan product that can close faster
All construction loans are Adjustable Rate Mortgages (ARMs), but can be refinanced into a fixed rate mortgage with a second closing
Interest rates are competitive with rates you will find on standard, non-construction loans. This is noteworthy because oftentimes specialized loan products require paying higher interest rates.
If you’d like to talk with Skip Clasper about Sandy Spring’s remodel, construction, or other loan products the best way to reach him is by email at firstname.lastname@example.org or phone at 301-928-7523.
Question: How much more do new construction homes sell for compared to similar homes that were recently built?
Answer: Roughly 100 new construction single-family homes have sold each year in Arlington since 2015 (per BRIGHT MLS). The cost of a new home shot up in 2018 and again in 2020 and 2021, but the size, layout, features, and design of the homes have remained mostly consistent.
Now that we’re seeing more resales of recently built homes, I thought I’d take a look at how the price of new construction homes compares to similar homes built in the last 5-6 years. To do this, I looked at the 2021 sales of new construction homes vs the 2021 resales of homes built from 2015-2019 in the 22207 zip code (by far the highest volume of new/newer home sales in Arlington). I also removed a few outlier sales so that we have a more accurate comparison.
New construction homes sold in 2021 sold for 16.9% more than similar 2021 resales of recently built homes (built 2015-2019), however, new construction homes were an average of 22% bigger (based on total finished square feet) than 2015-2019 builds sold in 2021.
As a result, new constructions homes actually sold for a lower price-per-square foot on both above grade (not including the basement) and total finished calculations. Thus, one could argue that new construction, with its lower price-per-square foot and brand new systems (HVAC, appliances, roof, windows, floors, etc), is a better value…but it’ll cost you a lot more in dollars to get there.
It’s also worth noting that while you get brand new systems in new construction, a resale has (hopefully) already gone through the initial pains of breaking in the house and the inevitable issues that come up for owners of new construction. You may also find that the first owners have invested in some improvements that a builder may not have such as upgrade exterior living spaces or landscaping.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com.
Question: What recommendations do you have for somebody just beginning to consider building a home?
Answer: If you’re considering building a home and looking for a great educational opportunity, I’d like to invite you to a walk-through with the builder of a home that’s currently under construction (3196 N Pollard St). The builder, James McMullin, is a 3rd generation Arlington home builder. At the end of July, he’s offering two educational walk-throughs for small groups during the framing stage of construction to provide a peek behind the walls.
If you’re interested in attending, please email me at Eli@EliResidential.com (I promise you won’t get spammed with marketing!).
I sat down with James McMullin to outline the key phases of building a new home from acquisition through post-completion, along with some helpful tips at each stage.
You can do this yourself or through a builder. A key competitive advantage for builders is a pipeline of quality lots.
If you acquire your own lot and find yourself in competition, it’s important to understand what type of offer terms you’re up against. Builders frequently offer existing homeowners months of free rent-back.
If you acquire a lot, make sure you establish a relationship with a builder before making an offer so they can provide necessary feedback on the feasibility of building the home you want either before making an offer or after (Study/Feasibility Study)
There are special loan programs available if you plan on acquiring your own lot. Troy Toureau (email@example.com) of Mclean Mortgage is an excellent resource for construction loans
Cost: Lots in Arlington are currently selling from $500,000 for less desirable lots/locations to well over $1,000,000
Designing the floor plan and elevations (exterior design) can be fun for some, but it’s easy for people to let this process drag on for months if they’re indecisive or unprepared
Having a great architect who understands your vision and current home design trends is critical
Full custom vs semi-custom: A fully custom home is designed from scratch to suit your tastes and will take much longer and cost much more in design fees. A semi-custom home uses a pre-designed floor plan and elevation template and you make small adjustments to suit your taste.
Cost: Semi-custom homes often range from zero design cost to a few thousand dollars, while fully custom homes usually cost tens of thousands in design fees.
In Arlington, you will submit plans for County review/approval including demolition, building (architectural), and civil (engineering) before any work can begin
It usually takes four months for permits to be approved by the County, assuming everything is submitted correctly
Cost: Permit fees vary based on a number of factors but will generally be $25,000 + for new construction.
Common pitfalls: If you are selecting fixtures and finishes, meeting timelines is often a challenge. Most people struggle to make finish decisions and the ordering process often takes longer than expected (months) with buffer needed to shipping issues or incorrect shipments. Having an experienced interior designer on-board can be helpful.
Demolition and construction often take 4-8 months and can be delayed due to weather, material shipping/availability issues, and an assortment of other factors
Cost: The cost of demolition and site prep, including utilities, generally costs about $100,000. Construction costs, including materials and finishes, generally ranges from $400,000-$700,000+ in this area
Throughout construction the County will conduct inspections of the home, but you cannot move in until the County has issued a Certificate of Occupancy (final permit approval)
You may also consider hiring a 3rd party inspector with home building experience to inspect the property through each stage of construction including the foundation, pre-drywall, and the finished home
It’s common for there to be a (long) list of punch-out items for the builder to complete after the County has issued a Certificate of Occupancy (paint touch-ups, a chipped cabinet, missing light fixture, etc). Most builder contracts require you to close on the new home within a certain number of days of the Certificate of Occupancy and allow the builder access to the home after closing to complete the punch-out list.
Minor issues, especially cosmetic ones like settlement cracks in the drywall, are common after closing and will require maintenance for the first 6-18 months. Many builders offer post-settlement touch-ups/maintenance as a courtesy.
If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.
Question: We bought a new home in Arlington five years ago and are considering selling, but we’re concerned about the resale value of new homes given the amount of newer homes being built in the market. Do you have any data on how new homes do when they resell for the first time?
Answer: The new/newer construction market is the only Arlington sub-market that is anywhere close to properly supplied, with almost 4.5 months of inventory available (number of homes for sale divided by average sales per month = months of inventory).
Most housing economists say that a market is at balance for buyers and sellers when there is six months of inventory. For comparison, sub-markets like one-and-two-bedroom condos, <$1M detached homes, and townhouses each have between one and three weeks of supply.
New Homes Are Appreciating…
There’s a logical case to be made that when a new home (built within the last decade) gets resold, it will struggle to compete with other brand-new homes given how similar these homes have been over the last ten years, combined with the amount of supply in the market. Fortunately for owners of recently built homes who may sell in the near future, that logic does not prevail and new homes are being sold for more the second time around.
…But Just A Little
There aren’t a ton of data points yet (most people buying expensive new construction will be there for a long time), but just enough that I think we can start to get a good idea of how new homes (that aren’t new anymore) from the past decade perform when they’re resold into a market with many similar new homes.
To study this, I identified homes built since 2012 that have since resold, excluding homes that sold within one year of their original purchase or any homes with major improvements since the original purchase or clearly left in disrepair. Here’s a summary of my findings:
53 homes met the criteria, nearly all in North Arlington
Average appreciation on resale was 6.7%
Average annualized appreciation was 2.1%
Only seven homes sold for less than they were bought
Sixteen homes sold for at least 10% above what they were bought
On average, it took 64 days for these homes to go under contract, about 30% longer than the entire detached home market during that same period
Cause For Concern?
For those who own a new(er) home, you may be underwhelmed by these numbers relative to what the rest of the market is doing — compared to other detached homes in the Arlington market, new homes are appreciating at a noticeably slower rate.
Part of that is due to the fact that there’s a much higher supply of similar new/newer homes for sale so that will naturally keep prices more stable. Another reason is that it takes longer for the upper end of the market to appreciate, so the growth we’ve seen <$1.25M hasn’t impacted the $1.5M+ market as much.
So is a new home a bad investment because it appreciates less than other homes? Not at all.
First, one of the reasons buyers pay a premium for new/newer homes is because your maintenance and repair costs should be significantly lower for the first 10-15 years. Investment value isn’t only about what you buy and sell for, it’s also about how much you spend between the two transactions keeping the house operating (often more valuable than appreciation).
Second, for most families, a new/newer home offers square footage and a floor plan they can’t find anywhere else so the non-financial/quantifiable benefits are significant. Opportunities to customize to taste also factor into the non-financial/quantifiable return that owners may receive.
The new construction market operates differently from the rest of the housing market. If you have any questions, don’t hesitate to reach out to me at Eli@EliResidential.com. And a quick plug for two custom homes on ¼ acre lots I’m selling in Bellevue Forest, being built by James McMullin, Arlingtonian and third-generation Arlington developer/builder. Demolition and excavation will start in the next month!
Question: Do you
think Pierce condos in Rosslyn will be able to sell for the prices they’re
Answer: A few
months ago, local developer Penzance
released details on their upcoming Highlands
development that includes three luxury residential buildings, one of which will
be a 27-story condo building called Pierce. Here’s a summary of what we know:
Floor Plans: 104 units ranging from a 1,270sqft 1BR+Den to a 3BR with over
Prices: Starting at $900k and increasing to over $3M
Finishes: Thermador appliances, hardwood throughout, Snaidero cabinets,
floor-to-ceiling windows, some direct-access elevators and other luxury touches
Amenities: 24hr staff, rooftop pool, two-story gym, club room, to name a
Courtesy of Mayhood at PierceVA.com
Is There Anything Else
It seems that Penzance is modeling its approach after
Turnberry Tower, the iconic all-glass blue building a block from the Rosslyn
Metro. Both buildings’ smallest units are 1BR+Den with about 1,300sqft, they
have similar high-end finishes, many units with direct-access elevators, and
both have luxury amenities.
Demand and prices at Turnberry have increased significantly
over the last 18-24 months, which is a good sign for Penzance.
Meeting New Demand
There is a significant, relatively new, demand in Arlington
for large condos to satisfy Baby Boomers downsizing from big suburban homes
around the DC Metro. Over the last 20 years of condo development in Arlington,
most floor plans have been 1BR-2BR, ranging from 700-1,000sqft. To find larger
floor plans, buyers are mostly left with buildings constructed in the 70s and
80s, so there is currently an underserved market for newer condos with large
For example, 2000
Clarendon, a condo building in Courthouse set to deliver next year,
originally planned six 2BR+Den units of ~1,400 and ~1,700sqft. They had so much
interest that they added two more. Their current waitlist for the 2BR+Den units
has over 20 people on it. However, the price of 2000 Clarendon units are about
half what similar units at Pierce will cost.
Will People Pay These
1BR+Den with 1,270+sqft start at $900k (4 units)
2BR with 1,320+sqft start at $1.1M (44 units)
2BR+Den with 1,953+sqft start at $2M (46 units)
3BR with 2,411sqft start at $2.6M (10 units)
More than half of the units will be $2M+
More than half of the units will be over
$1,000/sqft. Over the last five years, seven Turnberry condos and two Waterview
condos have cross the $1,000/sqft mark. DC hits this mark in its premier
Rosslyn has only begun its transition into a luxury market
and Pierce will be a great indicator of where Rosslyn is in the eyes of the
market. The sales won’t come overnight, or be without challenges, but the
developer can afford to be patient for:
The down-sizing Baby Boomers that Pierce is
suited for can afford to pay a significant premium for the right floor plan and
Amazon, Nestle, consulting/law firms, Defense
contractors, and tech start-ups are supplying more and more highly-paid
Executives to the Arlington housing market
International money will be drawn to its
proximity to DC and Amazon
Trophy units with direct views of DC and the
Potomac River should be in high demand because it’s unlikely that future
developments will block those views, something that has had a major impact on
many Turnberry owners in the last five years (I wouldn’t be surprised to see
some of them move a couple of blocks up the street to reclaim their views)
There are some challenges that will likely slow the pace of
sales and maybe even cause them to bring prices down on some units:
At these prices, buyers will also be looking at
similar units in DC’s top addresses in neighborhoods like Georgetown, West End,
and The Wharf
There will be a 7-11, fire station (quiet-exits
will help, but won’t convince everybody), and a school (a negative for most,
despite the beautiful design) within one block
Being up the (steep) hill from many of the
neighborhood’s top draws including Rosslyn Metro, Key Bridge, Mt Vernon Trail,
and new dining options
Rosslyn still has many elements from its sleepy
government office district days and probably 5-10 years from shedding that
completely via redevelopment that’s in the pipeline
Pre-sales are scheduled to begin in early 2020, but the
building probably won’t be finished and ready for move-in until well into 2021.
I don’t think the current market, or even the 2020 market, will be ready to pay
these prices for most of the 104 units, but I think by 2021 we’ll see Rosslyn
far enough along and Arlington’s market driving forward enough to generate some
eye-popping sales for Penzance’s Pierce condos.
Question: A big reason I chose to live in North Arlington and pay the premium that comes with it is because most of the neighborhoods were full of large, mature trees.
I’ve watched over the last 5-10 years as so many beautiful trees have been removed to make room for large new homes, only to be replaced by small trees that don’t survive or aren’t fit for this area. What can we do to educate homeowners about the value trees have in the community and on home values?
Answer: Thank you so much for this question, especially on the heals of a terrific study on Arlington’s tree canopy. It’s one that I don’t think gets nearly enough attention from homeowners, my colleagues in the real estate industry and local government.
The loss of our tree canopy resulting from reckless tree removal by builders who are more concerned with maximizing profit on a single lot than promoting long-term growth of our communities is a major problem for Arlington. In 2017, I wrote an article highlighting the financial benefits to developers who actively work to keep the existing mature trees on a lot so if we can show both short-term and long-term benefits to builders and developers, what do we do?
Don’t Wait On Local Government
For starters, we can’t rely on government policy, but need to work within our communities at a Civic Association level to promote education and understanding. Not every homeowner is concerned about the tree canopy, but everybody is concerned about the long-term value of their home, so we need to educate everybody that the two are not mutually exclusive.
We are never going to stop the replacement of old homes with new ones, but we can support builders who take steps towards tree preservation and discourage residents from working with builders who have no regard for our neighborhoods.
Over the past couple of years, I’ve worked with some fantastic Civic Associations (residents of Williamsburg should be proud of their community leaders!) and the Arlingtonians For A Clean Environment to brainstorm ways to protect our tree canopy and I encourage anybody who has an interest to get involved.
An Education For Homeowners and Builders
I will continue this discussion through my column on ARLnow until we see progress. I hope that readers with an interest in getting involved can share ideas and connect via the comments section.
To kick things off, I want to introduce Heath Baumann, an ISA Certified Arborist with Bartlett Tree Experts, to provide education for homeowners and builders on tree preservation, tree replacement and tree care. Take it away Heath…
One of the most overlooked assets on a property is often the trees.
Trees not only improve quality of life with shade and beauty, mature trees can affect property value. As Northern Virginia continues to infill and urbanize, trees will face greater amounts of environmental stresses. Larger homes, less permeable surface area, soil compaction and heat island effects can stress both new and mature trees in your landscape.
Your home is comprised of multiple systems such as HVAC, plumbing and electrical. It helps to think of trees in the same manner. Routine maintenance performed by a licensed professional is affordable and extends the life of your trees.
Tree Preservation During Construction
Constructions projects can severely affect the health of trees. Physical stability, water and nutrient collection are vital functions of the root system. Here are some Do’s and Don’ts to preserving trees during construction projects:
Develop a Tree Preservation Plan. Contractors and Consulting Arborists can develop this during the planning phase of your project.
Avoid intrusion into the critical root zone. Create a physical barrier with construction fencing to reduce soil compaction and physical damage to the tree by heavy equipment.
Have a licensed tree care provider perform any required root pruning.
Develop a tree care plan for affected trees. Certified Arborists can help the tree compensate for root loss and stress from construction activities.
Do not use heavy equipment to cut roots. Heavy equipment will cause extensive damage and compact the soil.
Do not allow construction materials, debris or chemicals to be stored around trees. Tree preservation zones are enticing areas for temporary storage. Soil compaction, chemical runoff and physical damage are all possible.
Do not use construction tools to perform pruning. Arborists’ tools are designed to make proper cuts reducing the impact on trees.
Replacing or Planting New Trees After Construction
Planting a tree is a wonderful feeling. A relatively simple activity can turn into a lifetime of enjoyment and an investment for future generations. The best part about planting trees is that nearly everyone is capable of doing it. It generally only requires a few tools that are available at your local hardware store or garden center. A few basic guidelines will help improve our success when replacing removed trees or adding to your landscape.
Purchase your trees from a respected nursery or garden center. These businesses offer warranties, have higher quality nursery stock and have knowledgeable staff that can help you make the right selection.
Select the right tree for the location. Height, spread, shade tolerance and growth rate are all things to consider. A full sun tree will not thrive in an already shady landscape and vice versa.
Have your soil tested. The soil’s pH affects the nutrient availability for a tree. The Virginia Tech extension service and certified tree care companies can perform soil tests for a nominal fee. Use this information to select the tree or to build a soil care program with your tree care company.
Dig the correct hole. The hole for your tree should be 3 times as wide as the root ball. If possible, rototill an area 5 times the root ball to help root production. The bottom of the hole should remain intact.
Have your trees structurally pruned. Some tree species have growth tendencies that can lead to structural failure or root issues. An ISA Certified Arborist can show you how a few well-place structural pruning cuts can help your tree develop its ideal form.
Do not plant trees too deep. This is the most common mistake I see on landscapes. Ideally, the transition zone between the trunk and the roots should be slightly above soil grade.
Do not mound mulch. Mulch mounds, along with deep planting, can cause the roots to encircle the trunk of the tree forming a tourniquet that strangles the tree.
Do not leave the tree in the container. If the tree is in plastic container, remove the tree and loosen the soil and roots before planting. If the tree is in a wire encased burlap bundle, cut away the wire basket and remove the burlap from the sides of the root ball after placing it in the hole.
Do not overwater your tree. Infrequent, slow saturations with a soaker hose will help good root development. Frequent shallow watering will develop shallow, unstable roots. Constant soil saturation will lead to root diseases. If the soil at finger depth (4 inches) is dry, it is time to water.
Tree Care Basics
The majority of my clients are established homeowners who are concerned about the health of their trees. Sometimes it is a large, prominent oak or a bright, flowering ornamental tree. Here a few simple Do’s and Don’ts that home owners can follow to help their trees:
Keep a mulch ring around the tree. This aides in temperature and moisture regulation while adding organic matter to the soil.
When watering use a soaker hose for infrequent, heavy saturations. This will ensure adequate soil moisture and help in root development.
Routinely look at your trees. The earlier an issue is caught, the better the odds of helping the tree.
Consult a professional. Certified arborists can work with you to develop a tree care plan based on your needs and budget.
Do not allow mulch to mound up at the base of the tree. Mulch can hold moisture against the trunk that can cause decay, increase stress and invite pests.
Avoid heavy application of lime or other lawn products. Lime and other lawn produces can affect the soil, making it unsuitable for trees.
Do not park or drive your vehicle over the root zone. This can lead to soil compaction.
Avoid damaging the tree with mowers and string trimmers.
Avoid employing a non-certified person or company to perform tree care. Improper pruning can lead to tree mortality and expose you to risks.
Even in ideal conditions, pests and diseases can attack trees. Fortunately, treatments exist for many of the common maladies in our area. If you are concerned about a tree, always contact an ISA Certified Arborist for a consultation.
Heath Baumann is an ISA Certified Arborist with Bartlett Tree Experts. If you wish to schedule a consultation with a Bartlett Arborist Representative, please call (703)550-6900.
Question: Can you provide insight into how much a tear-down home costs in Arlington and how lot size effects sale price of a single-family home?
Answer: Breaking News… land is very hard to come by in Arlington. Only 11 homes sold in the last ten years had one or more acres, and it’s going to cost you over $1M to buy one. The average lot size of a single-family home in Arlington is about 8,400 sq. ft. or .19 acres with about 70% of homes on 6,000-10,000 sq. ft. lots.
Here’s a look at the impact of lot size on sold prices of single family homes over the last three years broken out by zip code:
Cost Of Arlington Homes By Lot Size
The data above takes homes of all sizes and condition into account so it doesn’t do a great job of isolating the actual market price of the land or how much people pay for tear-down lots in Arlington.
To summarize that data, I pulled out the cheapest 15% of sales in each zip code over the last three years. I felt that the cheapest 15% of sales in each zip code were probably good bets for homes being bought for the land/location with the intention of tear-down or major renovations. Note: 22209 didn’t have enough sales to include in this table.
Cost Of Land In Arlington
If you’re thinking of buying a tear-down and building new, a good way to estimate how much your home will cost is to add the following:
Land acquisition (see above table for estimated land cost by zip code)
$75,000-$100,000 for demolition, preparing the lot for construction, and permits
$400,000-$800,000 on construction
Carrying costs of the loan and taxes during construction of the new home
Earlier this year I wrote about the variance in County tax assessments and market data. How do the market prices for land compare to the County’s tax assessments, which are broken out by land assessments and improvement assessments (assessed value of the home)? Let’s take a look at how the County has assessed land values on homes sold over the last three years and compare that to the market assessment of land values above.
The County Values Land Less Than The Market
Based on this data, the County values land at about 72% of the market value for land on the open market.
Once you’ve had some time to digest the cost of land in Arlington, let me know if you’d like to meet to discuss the process of buying a tear-down lot and building your own home! Email me at Eli@EliResidential.com to schedule an appointment.
Question: Do you have any details on the new condo building on Columbia Pike?
Answer: The development of Columbia Pike continues westward with the introduction of a very affordable, brand new condo building by Pillars Development Group. The success of recent residential projects, Columbia Place (condos and some townhouses) and Carver Place (townhouses), along the eastern half of Columbia Pike, signal that this will be a successful project for Pillars, who has developed other local condos like The Berkley in Ballston, The Henry in Alexandria and The Paramount in Reston.
What I’m Tracking
The developers decided to make 25% of the units Jr 1BRs, with just under 500 sq. ft., which hasn’t been a very common product in newer construction so I’m looking forward to seeing how these sell. I think it will be a great secondary residence for buyers who live 90+ minutes away and work nearby, as well as the modern value-based buyer looking for affordability and less space.
Unlike most small studio spaces, they have a separate room to sleep (functional bedroom that doesn’t meet legal bedroom requirements) which makes them much more desirable than studios with one large living/sleeping space. The asking price of these units will range from $250k-$300k with monthly condo fees just under $200.
For reference, only 32 condos have sold in Arlington over the last two years for less than $300,000 and monthly fees under $250. The average construction date of those units was 1964, with none being built in the last ten years.
Affordability and value are the selling points for Trafalgar Flats (ease of pronouncing the name is not) with 700+ sq. ft. 1BR units selling from the mid to upper $300s and 2BR/2BA units starting in the mid 400s.
The monthly condo fees are also a selling point, coming in about 10-15% lower than the average fee/sq. ft. of other Arlington condos, while still including a gym, lobby, outdoor terrace and bike storage. Above average condo fees were a problem for a lot of potential buyers of Rosslyn’s recent Key & Nash project, which is about 50% sold and about three months from completion.
For reference purposes, there have been 308 2BR/2BA condos sold in Arlington over the last two years for less than $500k and fees under $450/mo., but only three were built in the last 10 years. Bottom line… it’s rare to find value like this in Arlington.
There aren’t too many places left inside and around the beltway where you can expect above-market appreciation, but Columbia Pike is one of them, especially the western half now that the eastern section has already seen substantial growth.
At the current pricing and being in the early stages of western Pike development, savvy buyers and investors should pay attention. The property sits just two blocks from the site of the under-development Columbia Pike Village Center, anchored by a Harris Teeter (replacing Food Star), slated to open in 2019. Expect strong ROI from all three options — Jr 1BR, 1BR and 2BR.
From the builder, “We chose to build in this location due to the community’s close proximity to DC and the Pentagon. Arlington County is committed to the revitalization of the Columbia Pike Corridor. We are proud to be amongst the first to offer the opportunity to purchase a new luxury condo in this changing, urban environment.”
The building will have 78 total units with 25% Jr 1BR (under 500 sq. ft.), 25% 2BR/2BA (~1,000 sq. ft.), and 50% 1BR/1BA (over 700 sq. ft.) with prices ranging from mid $200s to mid $500s. Monthly fees will start at $192 for the smallest units and top out at $421 for the largest 2BRs. One of the best parts of buying pre-construction is being able to choose your finishes including cabinets, counters, flooring and tiling. All units come with one underground assigned garage parking space.
If you’d like to discuss Trafalgar Flats as a primary residence, secondary residence or investment please reach out to me at Eli@EliResidential.com or at (703) 539-2529.
Question: What’s being built across the street from Turnberry Tower in Rosslyn?
Answer: We don’t see many new condo projects these days in Arlington, developers are going with apartments due to low interest rates and surging rents, so the new Key & Nash condo and townhome project in Rosslyn is a welcome addition to the neighborhood. Over the last five years, we’ve had an underwhelming number of condo deliveries.
Along the Rosslyn-Ballston corridor, the only new condo sales have been Arc 3409 in Virginia Square (converted from a hotel in 2014) and Gaslight Square in Rosslyn (luxury condos).
On Thursday evening, the Key & Nash team hosted an unveiling party on the 23rd floor of 1812 N. Moore (the Monday Properties/Goldman Sachs building that has sat empty the last few years) to release details of the project and start sales for a late-2017 delivery. Leading up to the project, I expected that NVHomes’ new Urban Division would look to successful nearby luxury projects like Gaslight Square, The Wooster, Rosslyn Key, and Rhodes Hill Square for their design and pricing with an emphasis on Gaslight Square considering its most recent success with Phase 3 (final build-out).
Instead of delivering a fully custom luxury product, NVHomes is sticking with their bread and butter formula of delivering a more moderate project that fits surprisingly well between Rosslyn’s mid-market options like The Atrium, The Belvedere, 1800 Wilson and its luxury options like Turnberry Tower, Waterview, and those mentioned above. It makes sense for NVHomes, avoids over-saturating the Rosslyn luxury market, and satisfies demand.
With just over sixty units including 1BR + den, 2BR, 2BR + den, and 3BR flats ranging from about 850sqft to just over 1,500 sq ft, plus five 3BR townhomes at nearly 2,000 sq ft there are a surprising number of options for buyers. Starting in the low $600s and clearing the $1M mark for some of the larger flats and townhomes, it’s an attractive $/sq ft for a new building just a block from the metro and likely to benefit from the massive redevelopment of downtown Rosslyn. For market-average condo fees, residents will get a high-end gym, 7-day/week concierge, roof deck, large common terrace w/ grills, and underground parking.
I’m looking forward to seeing how the larger 2BR + den/3BR flats do compared to the townhomes. I think the challenge for the townhomes will be the fact that the master bedroom is the entire top floor, with the 2nd and 3rd bedrooms on the 2nd floor (main level is kitchen and living space), making it a difficult layout for buyers with a young child (prefer to sleep on the same level) and a lot of steps for regular trips between living space and master bedroom. However, with only five townhomes being delivered, they’ll probably be the first to sell-out.
Personally, I think the best value purchases are the 1BR + den and smaller 2BR/2BA because they’ll make great rental properties with the dens/2nd bedrooms being on opposite sides of the apartment from the master bedroom (ideal for roommates). If you’re planning to live there for a while and can afford the premium, there are two 2BRs with 500 sq ft private terraces and a handful of 1BR + den and 2BRs in the back with larger Limited Common Element terraces (only accessible to your unit, but technically common space) that offer hard-to-find “useable” outdoor space.
While there wasn’t anybody camping out for the sales office to open, the line to sign-up for a sales meeting on Thursday night reached 50+ people at some points and there were probably a few hundred people at the event. The R-B corridor and Arlington market is hungry for new condos and this delivers at a price range that meets a lot of budgets and designed to accommodate a range of buyer types, so I expect sales to move fairly quickly, even though people won’t get to step foot into a unit until the end of the year.
Feel free to reach out to me at Eli@RealtyDCMetro.com if you have any specific questions about the floor plans, pricing, location, sales process, etc or if you’re considering a purchase in the building. I’d be happy to discuss details and my thoughts on the investment potential of purchasing in Rosslyn.
Question: We are ready to move into a house we’ll raise our family in and are set on Arlington. We want a newer home, but are not sure if it’s better to buy new construction or resale; our decision will ultimately be a financial one.
Can you put together numbers that show how the sale prices of new construction compare to resale?
Answer: Of course I can! When weighing the financial decision of new construction vs. resale, you’ll also want to consider the replacement cost of major systems like HVAC, windows, roof, water heater, appliances, etc. that carry life cycles of 10-30 years (appliances being on the early side, roof/windows coming later) as well as higher efficiency factors of new homes that significantly reduce utility costs. Many new homes also come with extended “bumper-to-bumper” warranties that you won’t get in resale.
As expected, there’s a clear premium to be paid for new construction and buyers tend to negotiate a deeper discount from the original asking price on homes being resold. The dataset is based on sales since January 1, 2014 for detached homes built since 2000 with 4-6 bedrooms, 3-5 bathrooms, and 3-4 levels.
Are these numbers in-line with what you expect to see on the difference in sold price between new construction and resale? Are the prices about what you assumed for new/newish homes by zip code?