Neighborhoods Close to Urban Areas Are Hot
While the number of homes sold in Bethesda declined 6.3 percent from 2017 to 2018, demand remains high for housing near downtown, resulting in higher prices there, too.
“The Bethesda market has changed as the urban district has grown,” says Jane Fairweather, a Long & Foster agent. “Downtown Bethesda and nearby neighborhoods are in the right place at the right time now that the central desire of downsizers, millennials and even young families is to avoid driving long distances in traffic.”
With more buyers looking to leave their cars in the driveway, it’s no secret that the most in-demand locations are in downtown Bethesda and adjoining neighborhoods where residents can walk to restaurants and shops, says Lauren Davis, an agent with TTR Sotheby’s International Realty.
In 2018, the number of home sales in the 20814 ZIP code, which includes downtown Bethesda, were flat when compared with the previous year, but were up 18 percent over 2014. (See “Home Sales Trends” chart on page 174.) During that same five-year period, the average price of new homes in 20814 increased 15 percent to $1.2 million.
By contrast, in the 20816 ZIP code, which is comprised of Bethesda neighborhoods west of River Road, the number of home sales decreased from 199 in 2017 to 174 in 2018 and were almost the same in 2014 as in 2018.
While homes within walking distance of downtown Bethesda are in high demand, some buyers who don’t want to pay their increasingly costly sale prices are turning to other walkable communities. Sales of condos are strong at Pike & Rose in North Bethesda, which offers walkability to restaurants and entertainment but is more affordable than downtown Bethesda, Fairweather says.
Downtown Silver Spring—with an abundance of restaurants, shops and nightlife, as well as Metro access—has increased in popularity, too.
In downtown Silver Spring’s 20910 ZIP code, average home prices increased 4.4 percent from 2017 to 2018.
Up north, at Crown in Gaithersburg, new condos, townhouses and single-family homes in the Downtown Crown and Crown West neighborhoods account for some of the increase in home sales and listings for that area of the county. Nearly 540 homes have sold in Crown since it opened in 2013, or about 100 per year. In Crown West, a handful of townhouses and single-family homes are still available. In Downtown Crown, 65 of the 128 condos in The Copley have sold since sales began last spring.
New condos in Crown East from Pulte Homes are expected to be on the market soon. Residents can walk to restaurants, shops, parks and activities in Downtown Crown and the adjacent RIO Washingtonian Center, and take a shuttle to the Shady Grove Metro station.
The Potomac Market Is in Bad Shape…
The flip side of buyers’ growing preference for walkability and access to public transit is that neighborhoods with longer commutes and plenty of land are becoming less desirable, at least among buyers with deep pockets. Potomac, known for its extravagant mansions on multiple acres, has been losing steam for years, according to real estate agents.
“Potomac suffers from the ‘too’s’: It’s too far away, the houses are too big, they have too much land and you spend too much time in your car,” Fairweather says.
In 2005, 46 homes in Potomac sold for more than $2 million each, says Galanti, including 16 that went for more than $3 million. Those $2 million-and-up homes sold within an average of 112 days. In 2018, according to Galanti, only 24 sold for more than $2 million, and only seven for more than $3 million.
“The average time on the market for a house in Potomac priced above $2 million in 2018 was 214 days, a 100 percent jump compared to 2005,” he says.
Agents cite numerous examples of Potomac homeowners who sold their homes for much less than what they paid for them, including a home in Avenel that sold for $4.5 million in 2006 and recently was purchased for $2.85 million, even though the departing owners had spent $500,000 on landscaping and the installation of a swimming pool.
Potomac’s housing market also is a victim of the changing preferences of younger buyers, according to Marc Fleisher, head of The Fleisher Group with TTR Sotheby’s International Realty. “Fifteen years ago, people said that places like Avenel were a great place to raise kids, had a strong sense of community and had value because you could get more land for your money,” he says. “Now that the original owners are empty nesters and want to sell, the next generation that would naturally buy there would rather be close to downtown Bethesda or D.C.”
Fleisher says many of his affluent clients have kids who attend public and private schools in Montgomery County and the District, so they want to live in a middle ground where the commute to these schools is easier and shorter.
…Except Where It’s Not
Despite the crash of the higher-end market, overall home sales in Potomac were up in 2018. In the 20854 ZIP code, which includes Potomac and small parts of Rockville, 538 homes sold in 2018, a 15 percent increase over 468 sales in 2014. During the same period, the average sale price declined slightly to $1.08 million, largely the result of the slumping values of upper-end homes.
The reason for the dichotomy in Potomac is straightforward: The dramatic increase in prices inside the Beltway has forced homebuyers who want to spend less than $1 million to buy in the suburbs.
In Potomac, properties priced in the range of $600,000 to $800,000 are desirable, says Annabel Burch-Murton, a Compass agent. “In neighborhoods like Regency Estates, sales were up 123 percent between 2017 and 2018,” she says.
“With housing affordability plummeting, many buyers have been pushed further out into the burbs, benefiting communities like Potomac and Gaithersburg, which saw year-over-year increases, while the closer-in and more expensive communities all saw a year-over-year falloff in sales,” Wydler says.
In the 20878 ZIP code, which covers Gaithersburg west of I-270, including North Potomac, home sales and the average sale price reached five-year highs in 2018.