This regularly-scheduled sponsored Q&A column is written by Eli Tucker, Arlington-based Realtor and Rosslyn resident. Please submit your questions to him via email for response in future columns. Enjoy!
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.
Answer: 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 two 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 the Washington Post, over 27 percent of Arlingtonians are age 25-34 and they’re not buying homes just because their parents did, but comfortably 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, millennials 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 percent to 5 percent on loans of $417,000 to $625,500 and to 3 percent 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, daycare centers and game rooms like buildings I’ve seen in New York City.
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, including 38 Place, Arc 3409 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?
If you’d like a question answered in my weekly column, please send me an email at [email protected]. To quickly read any of my older posts, visit the blog section of my website at http://www.RealtyDCMetro.com.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with Real Living At Home, 2420 Wilson Blvd #101 Arlington, VA 22201, 202-518-8781.