Real estate market

High prices in the District are pushing more home buyers past the city limits

As featured in The Washington Post

When Steve Goetz purchased his 800-square-foot condo in Columbia Heights about three years ago, the two-bedroom, one-bathroom home had more than enough space for him. But then he got engaged. Then he and his now-wife, Tiffany Williams, got a dog. Then they wanted another dog, which was against the condo rules.

“When we talked about starting a family someday we knew that the condo would be too small,” Goetz said. “We wanted to stay in the city, but we quickly discovered that to go up in size by 500 square feet would cost us about $200,000 more than the place we own now.”

Goetz purchased his condo for $300,000 and in the beginning of 2015 contacted a realty agent who estimated he could sell it for at least $400,000.

“We started exploring Rockville and Gaithersburg in search of more space and then found Hyattsville with the help of our Realtor, Balaram Owens with Real Living at Home,” Goetz said. “It seemed the closest to an urban environment, and we can walk to a grocery store and restaurants.”

Goetz and Williams purchased a newly built end unit townhouse with 2,000 square feet, a back yard and a deck.

“We feel like we made the right decision because we love the space, especially the outdoor space,” he says. “On the other hand, we’re in a pseudo-urban environment and we still miss our favorite Thai restaurant.”

The couple’s Columbia Heights condo sold for $423,000, and their new place, with more than double the square footage, cost $435,000. Goetz estimates that a comparable home in the District would cost $800,000 or more, if they could even find a similar place. Their commute time increased by about 20 minutes via Metro. The couple continues to live without a car even though they have a two-car garage.

Goetz and Williams are not alone in discovering that their dollars go further outside the District’s borders. According to a recent report by Redfin, on a national basis the typical home sold in 2015 was about 4 percent farther from a city center than the typical home sold in 2011. In the D.C. area, the median distance of sold homes from the city center rose from 16 miles in 2011 to 16.9 miles in 2015. While that sounds negligible, it’s a 6 percent increase in distance from the city.

The affordability gap between D.C. and its suburbs is among the widest in the country, according to Redfin’s data. The median price per square foot in the city was $511 compared with $187 in the metro area in 2015.

Redfin’s findings are supported by the “2016 Home Buyer and Seller Generational Trends Report” from the National Association of Realtors (NAR), which found that contrary to the popular image of millennials flooding the cities, more of them are buying in the suburbs than in the past. The survey shows that the share of millennials buying a home in an urban or central city location decreased to 17 percent in 2015 from 21 percent in 2014. In addition, fewer millennial home buyers purchased a multifamily home (10 percent) in 2015 compared with 2014 (15 percent). NAR’s survey found that the majority of buyers in all generations purchase a single-family home in a suburban area.

Affordability issues
Young buyers, even when they want to live in a city, often find it impossible to find something they can afford there. Some buyers will decide to continue to rent. For others, location trumps home preference and they’ll buy something smaller or in worse condition than they anticipated. The rest head to the suburbs.

The most affordable prices in the closer-in suburbs right now are found in Prince George’s County.

According to Rockville-based multiple-listing service MRIS, 50 percent of ­single-family homes listed for sale in Prince George’s County in February were priced under $300,000, compared with 12 percent in the District, 4.5 percent in Montgomery County and 4.3 percent in Northern Virginia.

Ria Caldwell and her fiance, Will Townshend, both recent law school graduates at the University of Virginia in Charlottesville, started jobs in D.C. and hoped to buy a home in the Capitol Hill neighborhood, where they rented while working in the city last summer. The couple has three dogs that collectively weigh more than 80 pounds, so renting is not an option.

“Our budget was $500,000, and, with the dogs, our priority was a home with a yard,” Townshend said. “We couldn’t find anything in our price range in Capitol Hill, and then we looked at Petworth, Carver Langston and Woodridge, too.”

Caldwell and Townshend worked with Leslie White, an agent with Redfin, who encouraged them to look just over the District line from Woodridge in Mount Rainier. The couple purchased a two-bedroom, two-bath single-family home for $350,000 three blocks from the District line. The 1920s Colonial-style home has 1,500 square feet and sits on a one-fourth-acre lot. The home has already been renovated, so the couple only needs to add a fence for the yard.

“A similar-sized home in Woodridge would have cost $500,000, and our taxes are lower, too,” Caldwell said. “We’re near the Glut Food co-op and the Arts District, plus there’s new development and new restaurants coming in.”

The couple says their commute is actually shorter since they’ll drive together rather than commute by Metro. They tested the drive at rush hour and say it’s only about 20 minutes.

“We don’t have any regrets now about leaving the city, although we do miss being able to walk to everything in our old Capitol Hill neighborhood,” Townshend said. “But we got exactly the home we wanted, and we’re paying much less than we were paying in rent.”

Owens says his area of expertise is helping buyers make the move from the city to the inner suburbs. A real estate agent friend who works primarily in Columbia Heights sends clients his way who decide they’re ready to give up looking for something affordable in the city.

“The number one driver for buyers leaving the city is that they need more space so they can live their lives,” Owens said. “If your budget is $500,000 or under, you can’t find a house with a yard or with modern accommodations like an open floor plan, a master bedroom with an attached bathroom or an updated kitchen.”

Owens said the priority for most of the buyers he works with, besides getting a little more square footage, is living within a 20-minute walk from a Metro station.

“Buyers who have been looking in Columbia Heights often start looking in Takoma Park, Silver Spring, Hyattsville, Cheverly and Mount Rainier,” Owens said. “If they can live in a place with restaurants or bars in walking distance, that’s a bonus, too.”

Unfortunately, Owens said, competition is stiff in those locations, and homes within an easy commute by Metro receive multiple offers.

“Hunting for a home at the right price point and location is like hunting for buried treasure,” White said. “It’s a little easier when people are less transit-dependent or are willing to take a bus to get to Metro or to work, but some people don’t have that tolerance.”

White said most buyers search online for information about a particular location, such as how far it is to stores and commuting options.

“Sometimes people are resistant to going farther out from the city but then they find that some of the older brick houses in pockets in Silver Spring and Forest Glen are bigger than they look from the outside and have a real yard,” White said. “I encourage people to open their eyes to different areas and just search for homes based on their price range. They drive by or tour the house and the area and then cross it off or keep it on the list, but at least they’ve seen what else is available in neighborhoods that they didn’t know about.”

Yolanda Muckle, a realty agent with Long & Foster Real Estate in Mitchellville, Md., says she recently worked with a young couple who relocated to this area from Texas. They were renting in Ballston, where the husband works, while the wife works in D.C.

“Ideally they wanted to live in the city where they could walk to restaurants and shops, but their maximum budget is $350,000,” Muckle said. “They looked in Northern Virginia and in Montgomery County but didn’t find anything that fit their budget. They eventually bought a new townhouse in Westphalia in Upper Marlboro.”

While they can drive to the Branch Avenue or Suitland Metro stations, neither is within walking distance. Westphalia will eventually have a town center with shops, restaurants, entertainment and a fitness center.

Affordable spots with city amenities
The phenomenon of people leaving the city in search of a more affordable home is nothing new, of course, but the desire for walkability and urban life, particularly for young people and empty-nesters, has grown in recent years.

“It’s always been true that the farther out you go, the more you can get for your money,” said Jane Fairweather, an agent with Coldwell Banker Residential Brokerage in Bethesda. “What’s different now is that people can find downtown areas with a sense of community and places where you can walk to restaurants outside of the city. We’re getting back to more of a European model where people can walk to everything and be involved in their local community.”

Fairweather said empty-nesters selling their older single-family homes in Montgomery County who plan to downsize in a walkable community face sticker shock when they discover that prices in Bethesda are now $900 to $1,500 per square foot.

“Some of those buyers go to the next Metro stop on the Red Line to Pike & Rose in North Bethesda, Rockville Town Center or to Crown in Gaithersburg, as long as they’re not ‘downtown snobs,’ ” Fairweather said. “Younger people are moving farther out, too, looking for a place where their kids can play outside, but they want to ride their bikes or walk to a Metro station if possible because of their commute.”

Hyattsville’s Arts District and downtown Silver Spring also offer a city feel.

Role of schools in affordability
Young buyers without kids may be less concerned about the school system in the neighborhoods they are exploring, but most buyers recognize the connection between school reputations and home values. Owens said that many of his buyers assume that school quality will improve by the time they have children.

“Homes have a higher premium in Montgomery County because the schools in that county are considered among the best in the country,” Owens said. “Takoma Park is known for having a historically strong community with good schools, but that’s kept home prices higher there. Silver Spring has already transitioned to having better schools than in the past, and home prices have risen there, too. The hope is that schools in areas with new development such as in Hyattsville and Mount Rainier will improve.”

White said that most people understand that schools change over time.

“Some buyers are entirely focused on a particular school, but most look at schools as one of many factors when choosing a home, along with the monthly payment and the commute,” White said.

Goetz and Williams started their home search in Montgomery County in part because of the better reputation of that county’s school system compared with Prince George’s County.

“We don’t have kids yet, but we looked at the ratings and county websites for information on test scores to find elementary schools that seemed to be improving in Prince George’s County,” Goetz said. “We bought in an area with 300 new homes that will feed into the elementary school and feel that the schools in Prince George’s County are going in the right direction.”

Realty agent Carol Temple with Coldwell Banker Residential Brokerage in Arlington said she constantly hears buyers say they would rather live in the city but that it’s too expensive.

“Buyers today are extraordinarily price conscious,” Temple said. “No matter what their price range is, they just don’t want to feel stupid at the end of the day and feel as if they paid too much. They know enough to temper their wants for what they can comfortably afford.”

How to find a city-alternate neighborhood
●Use electronic tools to search for homes in your price range throughout the D.C. area.
●Map out potential commuter routes and public transit options.
●Use an app to find out neighborhood information.
●Ask friends and co-workers about where they live, where they’ve looked for housing.
●Visit open houses.
●Drive around a neighborhood at different times and on various days.
●Read neighborhood profiles online.
●Check out county school websites for test scores and other information.
●Visit GreatSchools.org for ratings.

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