New Construction Tips and Learning Opportunity

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.

Lot Acquisition
  • 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 (ttoureau@mcleanmortgage.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
Planning/Design
  • 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.
Permitting
  • 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.
Demolition/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
Completion/Post-Move
  • 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.

Why Can’t I Find A House!?

Question: I’m prepared to make a strong offer in Arlington’s hyper-competitive market, but I can’t even find a house to make an offer on! Why is every home on the market either old and too small or new and too big??

Answer: While debates about Missing Middle and tear-downs continue, I thought it would be helpful to look at why Arlington is such a difficult place for most families to find good housing options. Most of Arlington’s single-family housing problems stem from when the majority of homes were built – before 1960 and within the last decade. Only 17.8 % of single-family homes sold since 2016 were built between 1960 and 2009!

Too Old, Too New

According to Arlington’s 2019 Profile, there were 28,500 single family detached homes in the County and according to public records, ~80% of those homes were built prior to 1960 or since 2010. Why is that a problem?

Many homes built prior to 1960 are functionally obsolete for most families (“the reduction of an object’s usefulness or desirability because of an outdated design feature that cannot be easily changed”) and homes built since 2010 have an average price of nearly $1.8M over the last 18 months.

Most homes built in Arlington in the 1940s and 1950s (with the original footprint) are plagued by 2-3 small bedrooms with small reach-in closets sharing one small bathroom, small enclosed kitchens, and small basements with low ceilings. They also lack the openness desired by most families in today’s market. Unfortunately, there’s very little one can do to bring these older homes up to today’s standards without extensive/expensive remodeling and/or expansion.

The economics of building a new home in the last decade doesn’t support the construction of a more modest homes (3,000-4,500sqft) so most new homes are built with 5,000-6,000+ square feet and are priced well above most budgets.

Just Right

It wasn’t until the 1980s and 1990s that Arlington homes were consistently built with designs more suited to today’s buyer including things like attached garages, master suites, and combination kitchen/dining spaces. While these 1980s-1990s designs may not be perfect, it makes for more reasonable compromises at prices many more Arlington families can afford.

Unfortunately, over the last four years, there have been fewer single-family homes for sale that were built during the 1980s and 1990s (4.3% combined) than any other decade until the 1910s.

Housing Changes Over Time

I put together some charts to highlight how home sizes have changed through each decade as well as how the average cost of a home changes by the decade it was built. These charts are based on Arlington single-family detached sales since 2016.

Note: Older homes that have been remodeled/expanded and sold are included in this data so the average size, bedroom, and bathroom count for older homes is higher than what you would expect from the original designs. Most pre-1960 homes were built with three bedrooms, one bathroom, and under 2,000sqft.

Note: Total finished square footage includes any finished basement space.

Here’s the data table for each of the charts:

Decade Built# SoldAvg PriceAvg BRsAvg Full BAsAvg Finished Sqft
<1930355$945,3453.62.42,302
1930s562$899,8673.52.42,315
1940s987$827,1973.52.32,121
1950s961$870,4533.72.52,413
1960s232$915,8184.22.92,760
1970s104$944,5764.02.82,919
1980s86$1,006,0184.23.03,193
1990s96$1,184,4094.63.23,641
2000s229$1,430,9054.94.04,697
2010s584$1,638,6965.24.65,004
Total4,196$1,022,3724.02.92,965
Using This Information

For those of you currently searching for a home or planning to start your home search, hopefully this information can be used to help you understand how likely/unlikely it will be to find the type of home you’re looking for and be more prepared to act decisively when the right home hits the market.

For those of you who own a home that falls within the middle-ground many buyers are seeking, you should have an even more favorable position within an already favorable market for sellers.

If you’d like to discuss buying or selling strategies, don’t hesitate to reach out to me at Eli@EliResidential.com.