Great Falls puts estate into real estate.
Last month, ZIP code 22066 in Great Falls ranked 86th on Forbes magazine’s list of the 150 most expensive places to live in the country. It was the only ZIP code in Virginia to make the list.
With a median home value of $922,500, Great Falls fell short of the No. 1 ranked Atherton, Calif. by $1.57 million, but beat out the final 150th slot by $223,000.
“We are in an absolute great location,” said Frank Gstrein, assistant manager of Weichert in Great Falls, describing the locality. “We can’t sell to everybody, so there’s going to be high demand.
“We’re so close in, but we have a rural feel,” said Gstrein, who sees Great Falls as a trendsetter in the high-end market. “With the land [in Great Falls], you can have a home on a 2-acre, 5-acre, 10-acre parcel.”
THE HIGH DEMAND Gstrein attributes to Great Falls also applies to the rest of the region.
Based on sustained high demand, residential home appreciation in the area continues to experience growth not unlike a newborn.
According to figures from the Northern Virginia Association of Realtors (NVAR), the average selling price of attached and detached single-family homes in Fairfax County has increased from $332,166 in 2001 to $558,817 today. That’s a 68 percent increase in four years. Arlington County has seen an 82 percent increase, from $394,100 in 2001 to $717,800 today. In Loudoun County, the average price of these homes has increased 71 percent the last four years, from $300,000 to $512,000.
“Average sales prices in Northern Virginia nearly doubled between 1999 and 2004 from $238,000 to $441,000,” said Amy Ritsko-Warren, manager of communications and media relations at NVAR. “Over that same time, the number of homes sold in the area increased by 10,000 units.”
But it seems that one of the reasons Great Falls made the Forbes list is not a trend that it set, but a trend that it defied.
“These glamorous places are communities that tend actually to appreciate at a slower rate,” said Gleb Nechayev, chief economist at Torto Wheaton, a firm that tracks several regional markets, including the D.C. metro area. “The prices might be very high, but the growth is not as high as some of the surrounding areas.
“What we’ve seen in other places, at least, is that traditional communities around the [high-end] area catch up very quickly,” Nechayev said. “That gap [in price] narrows to a certain degree. They usually never catch up but the gap will narrow somewhat.”
The high-end homes in Great Falls are keeping up the pace, increasing in value at just about the same rate as the average for the region. For example, this year the average home in Great Falls went up 22 percent, which was just 1 percent less than the average for all of Fairfax County, according to the 2005 real estate assessments conducted by the Fairfax County Department of Tax Administration.
“That raises some interesting questions, like what’s driving appreciation?” said Nechayev. “Where is demand coming from?”
Ritsko-Warren, who has monitored housing trends for NVAR, makes similar conclusions as the economists. “With the solid job growth in Northern Virginia and low unemployment, demand for housing will continue,” she said.
Some economists have also speculated that demand in the region has been reinforced by people buying second and third homes as investment properties. Nechayev said that while it’s hard to get a good grasp on this trend because of limited data, it seems to be growing.
SOME REAL ESTATE agents, who talk with hundreds of homebuyers each year, support this speculation. Many agents have noticed more of their clients buying second homes.
“There’s definitely a larger percentage of people in the Northern Virginia area buying second homes,” said Steven Riggs of Long & Foster in Burke. “A number of transactions we’ve had have been second homes for people,” said Riggs, a Realtor for six years.
Michael Huling of Coldwell Banker in Vienna, a Realtor for 16 years, said, “It has been a growing trend in the past two years, but in my personal opinion it has just recently been slowing down.” Buyers, in Huling’s opinion, aren’t buying single-family homes as second properties, but rather have usually looked to condominiums. “That has fueled the condo market,” he said. A growing number of condo developers have responded to this trend, Huling said, with the inclusion of owner-occupancy clauses.
Attracted to the investment potential in the area, Andrew Sterling, a resident of Sterling, currently has his hand in five investment properties.
“It does seem that there is a lot of demand for investment properties, which makes it difficult for investment buyers because there’s a lot of competition,” Sterling said.
“The main reason [for buying investment properties],” Sterling said, “is the high levels of appreciation and my faith in continued appreciation over this next year.”
And that’s the $1 million question that everybody persistently asks: how long will the trend of high appreciation last?
While economists answer this question differently with varying time frames, Nechayev said, “There’s no reason to think that it can’t continue for the next few years.” Although, he added, “At some point, it will correct.”