March-April 2021 | Home & Garden

Moving out

The Bethesda-area real estate market is booming, thanks in part to people wanting more space after being stuck at home for so long

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Matt Robertson and his daughter at their home in Potomac’s Merry-Go-Round Farm neighborhood. Photo by Skip Brown

It was July 2018 when Audrey and Matt Robertson first drove into Merry-Go-Round Farm, a neighborhood of custom-built homes off River Road in Potomac. Planning to move to the Washington, D.C., area from Texas for a job opportunity, they were driving around to get a feel for where they might want to live with their preteen daughter and golden retriever.

Matt had suggested they look at a house in the upscale development, where many properties have a view of the Potomac River. The neighborhood is also home to a horse farm and walking trails. “I was like, no way am I living this far out. I’m not doing it,” Audrey recalls telling her husband.

The family decided to move into a small two-bedroom apartment near Dupont Circle in Northwest Washington, D.C. After living in a house in Dallas for 20 years, they wanted to try true urban living while they figured out where to settle permanently. The apartment was convenient for the Robertsons; it wasn’t far from the financial services firms where Matt, now 46, and Audrey, 45, worked, or from their daughter’s private school in Bethesda. The family agreed that the apartment was “really great,” Audrey says, “because we were only there on nights and weekends.”

Then came the pandemic, and the switch to working from home for the couple and online learning for their daughter, now 13. “When it became a 24/7 scenario, both of us working from home, our daughter doing online school, it got a little tighter,” Audrey says.

By the summer of 2020, the family decided it was time to find a larger and more permanent home. Enjoying city life, they first looked in Georgetown, but were unwilling to pay what it would cost for the amount of space they wanted. Joining forces with a real estate agent and broadening their search to the Westmoreland Hills neighborhood of Bethesda, the couple still didn’t find anything suitable. Wherever they looked, they ran into the problem that’s plaguing buyers throughout the metro area: There just weren’t many houses for sale. In early October, the couple decided to check out a six-bedroom home with a recently redone kitchen and master bathroom—in Merry-Go-Round Farm. “We drove out and drove up to the house and we’re just like, yes, this is it,” Audrey says. “It was full circle in 2½ years.”

Audrey says a combination of factors helped change her mind about moving to a more rural area. “It was a beautiful sunny day. There are horse trails in the neighborhood, and you could see horses walking by. I think they planned that as a selling point,” she says, chuckling. “Seeing the house online, driving through the neighborhood, driving up to the house, the feeling we had about being ready for more space, being able to feel more settled in the area—it all just came together.”

The 7,500-square-foot house on a mostly wooded lot offered plenty of space for separate work offices and a room for their daughter’s online learning. Audrey and Matt weren’t worried about the commute because Audrey knew she could work from home indefinitely and that the drive wouldn’t be too bad if Matt had to return to his D.C. office. Still, Matt wanted to be sure that Audrey was ready to leave behind the convenience of city living.

“My husband said, ‘Let’s look at the reality of it. You can’t walk to the coffee shop. You can’t just zip to the grocery store. Are you going to be OK with that?’ And so we had a long conversation and I’m like, ‘I’m ready, I’m so excited,’ ” Audrey says. She clocked the drive from the house to a nearby Starbucks—six minutes—and checked that the local Whole Foods Market would deliver. “I’m like, OK, we’re good,” she says.

The Robertsons’ new home in Potomac has six bedrooms on a mostly wooded lot. Photo by Skip Brown

With their November move into their new home, the Robertsons joined other buyers who have chosen to upgrade during the pandemic to larger homes in the suburbs, both in close-in communities like Bethesda and downtown Silver Spring and farther-out neighborhoods in places like Potomac and Darnestown. Often motivated by the need for more space and wanting to take advantage of historically low interest rates, according to real estate agents, these buyers ignited a local real estate market that had been bracing for a bad year.

For example, Washington Fine Properties, a real estate company that focuses on high-end residences, saw its home sales in the metropolitan region jump from 2,167 in 2019 to 3,087 in 2020—an increase of about 42%, according to agent
Marsha Schuman, who specializes in selling Potomac properties.

“The real estate market in the D.C. metro area has been highly energetic, which came as a bit of a surprise to us,” says David DeSantis, partner and managing broker at TTR Sotheby’s International Realty in Bethesda and the District. “When the pandemic first hit in March and we went through that first shutdown period, things got really quiet for about four weeks, and we thought, OK. This is going to be the worst year for a long time. And then we bounced right back.”

Dana Rice, an executive vice president with the real estate company Compass who was the Robertsons’ agent, says business has been “nonstop” after an initial slowdown last spring. “Even Upper Northwest D.C., which would be considered sort of like suburbia to some who are in downtown [D.C.]—it just opened up for consideration. And when [buyers] get to that location, they look around and say, ‘Oh my gosh, this isn’t so bad at all. Look, there’s civilization and stores and restaurants that are actually kinda cool,’ ” says Rice, who serves clients in Upper Northwest D.C. and nearby Montgomery County communities.

Wendy Banner of Long & Foster Real Estate says the luxury single-family home market in Bethesda and Potomac, where she does most of her business, also shows no signs of cooling down. “I’ve been waiting about 20 years for the market to turn around, and almost every big property we have has sold, and at all kinds of price ranges,” she says. “I carry 20 to 30 listings at a time, and now I have five or six. Prices are way up, and demand is way up.”

In Montgomery County, the median sales price for 2020 was $482,000, about a 7% increase over 2019, according to data provided by MarketStats by ShowingTime based on listing activity from Bright MLS, a real estate service that provides analytical data. The data shows the average sales price for all types of Montgomery County homes was about $589,400 in 2020, compared with nearly $555,000 in 2019. For detached homes, the average sales price increased more than $59,000, to nearly $775,000.

Martine Bernard and Reza Amirkhalili moved from Bethesda to this seven-bedroom house in Darnestown. Photo by Skip Brown

In the 20814 ZIP code, which includes parts of Bethesda, North Bethesda, Chevy Chase and Kensington, the average sales price was about $1.25 million, a roughly 8.6% hike over 2019.

The real estate market, which usually heats up in the spring and then cools down heading into winter, was different in 2020, with high activity continuing through the end of the year, according to Bright MLS. While closed sales in the county were up 6.1% over the same period in 2019, they increased by 26.4% in December vs. the same month in 2019.

Real estate agents say most buyers don’t seem to be driven by a fear of living in more densely populated areas during a pandemic. Rather, their experiences during the pandemic made them realize that they wanted more room—indoors and out.

“I don’t think that the phenomenon is so much related to, ‘Oh God, we’re afraid to live in the city, so let’s move into the suburbs,’ ” DeSantis says. “Given that we are all spending a lot more time in our homes, a lot of city dwellers who have been living in smaller dwellings, whether it’s a condo or a smaller house, and are now spending 24 hours a day with their significant other and/or their children…it has caused everybody who is able and willing to say, ‘We need more space.’ ”

It’s not just single-family homes that are hot.

According to Bright MLS, buyers in the Washington, D.C., metro area continued to show strong demand for condos and townhomes, with median prices in November hitting a record $342,000. In Montgomery County, the median sales price for attached homes hit a 10-year high at $352,000 in November, a 6.7% increase over the median price in November 2019. The average sales price for attached homes in 2020 was more than $11,000 higher, at nearly $371,000, than the figure for the same period in 2019.

“We’re seeing people move out of one-bedroom condos into two, out of two-bedroom condos into houses,” DeSantis says. “If people can move up, they are moving up. And, of course, really low interest rates are making that possible.”

Though financing is favorable for buyers, those who are looking are finding that there aren’t many houses available—a longstanding problem in the county, according to agents and county officials. Although new listings were up just over 49% during December when compared with December 2019, they were down almost 6% over all of 2019.

“Inventory has never been as low as it is right now, so the fact that buyers are still out there and want to buy, it is just exacerbating the trend of things going quickly, going with multiple offers, particularly for houses, if you’re kind of in that sweet spot between $700K and a million and a half,” DeSantis says. “It’s the most frustrating thing in the world to be a buyer because you see [a house] on Thursday and if you’re not prepared to get an inspector in there to inspect it in advance, then write an offer by Sunday night, it’s gone.”

Long & Foster agent Jay Dahill, a longtime Silver Spring resident who now lives near The Wharf in Southwest D.C., was astounded by the interest in a home he listed in early December for $649,000 in Woodside Park, a neighborhood near downtown Silver Spring where some homes have sold for around $1 million in recent years. Built in 1948, the four-bedroom brick rambler has a wet basement and needs major renovations. “Within three or four hours, it became clear it was going to be a frenzy. By the weekend, agents were calling me angry that they couldn’t find slots to get their clients in to see the property,” says Dahill, who scheduled 84 showings. Seventeen buyers submitted offers, and the house sold for a price that had “escalated significantly,” he says.

Liz Brent, founder of the Go Brent brokerage in Silver Spring, says the critical shortage of inventory is partially fueled by homeowners who are choosing to stay put. “People who want a master bath, who want to move up, who want a slightly larger house, very often will end up renovating their house because there simply aren’t any [moving] options,” she says. “So not only does it not open up that house for somebody to move into, but that house is removed from the small house market forever. And then the person that wants to get out of the condo can’t get a house, so all of these issues are interconnected. It’s a vicious circle, and as the housing gets tighter, it gets harder and harder and harder.”

Brent says she’s seen as many as 22 bids on a property and also escalation clauses that have led to sales as much as $125,000 over an asking price. “That is not a COVID-driven problem,” she says. “That is a ‘there aren’t any houses’ problem.”

Agents say the Potomac market got so hot through the summer and into the winter, especially for houses priced at $1.2 million and under, that buyers were offering hundreds of thousands of dollars above asking price. “This is the craziest I’ve ever seen it,” says Long & Foster agent Gail Gordon, who has been selling real estate since 2005.

In 2020, 642 houses were sold in the Potomac area’s 20854 ZIP code—96 more than in 2019, according to Bright MLS. The average sales price increased from just under $1.1 million to about $1.2 million.

The trend reversed a yearslong slump in which homes priced at $2 million and above languished on the market for months, if not years, requiring sellers to drop their prices or take them off the market. Long & Foster agent Brooke Bassin, who grew up in Potomac and began working in real estate when she returned home after college, remembers those years. “I couldn’t believe what had happened. People weren’t actually giving their houses away, but what they thought would sell for $3 million was no longer selling for $3 million,” she says.

Banner says some sellers are even recouping money they’ve spent on renovations over the years. “I’ve had more high-end sales over $2 million this year than ever before, including several around $4 million,” she says. “The market didn’t just reverse a trend, it was like a pivot. And I also see the discretionary buyer who is now back in the market—somebody who doesn’t have to move.”

Schuman says the number of Potomac homes and condos priced at $2 million or more sold by Washington Fine Properties nearly doubled from 26 in 2019 to 47 in 2020. The company’s sales of homes priced at $4 million and above throughout the county jumped from six to 19—a 217% increase—during the same period, she says.

While low inventory benefits sellers, and buyers are likely to pay more for updated homes that don’t need to be renovated, “it’s a savvy market around here,” Schuman says. “People have heard the market has gotten a lot better in Potomac. They want bigger lots, they want bigger houses, so sometimes sellers get a bit…you know, wanting to try a higher price, and if that happens, you have to follow it down to what the market tells you it’s worth.”

From left: Reza Amirkhalili, Martine Bernard and their daughters—Mina, Lila and Ava—on the 15-acre property they recently moved to in Darnestown. Photo by Skip Brown

It’s the day before Thanksgiving, COVID-19 infections are surging, and Montgomery County Planning Board Chair Casey Anderson is gazing through the windows of his office in downtown Wheaton at the steady traffic passing by, musing about whether the pandemic will have a long-term impact on where and how people want to live in the county.

“It just looks like everything is normal,” he says. That’s “pretty good evidence” that the pandemic may not permanently change residents’ lifestyles. “People have a very powerful tendency to want to live their lives the way they want to live them, for better or for worse.”

During the first few months of the pandemic, when New York City and other metropolitan areas were hit hard by the virus, the national media lit up with stories about people fleeing cities—citing fear of  COVID, the ability to work remotely, a desire to be closer to family, and financial reasons as the top motivators. But by summer’s end, data was showing that narrative to be more myth than reality, according to industry analysts.

“By and large, the data show that suburban housing markets have not strengthened at a disproportionately rapid pace compared to urban markets. Both region types appear to be hot sellers’ markets right now,” researchers wrote in the Zillow 2020 Urban-Suburban Market Report published on Aug. 12.

A survey released by moving company United Van Lines found that 13.5% of customers who moved in August cited the virus as a contributing factor in their decision. The data, released in October, was collected by parent company UniGroup from more than 6,000 United Van Lines and Mayflower customers who moved between March 1 and Aug. 31, 2020.

Career change was the major reason people moved in 2019, with about 50% relocating for a new job or company transfer, according to the United Van Lines 43rd Annual National Movers Study released in January 2020. In 2019, Washington, D.C., “saw the largest influx of residents due to a new job/company transfer at 78%,” the moving company reported.

According to the survey released in October, the District ranked No. 1 on a list of the “top outbound states” in the percentage of moves away from a location in which the virus was cited by customers as a contributing factor. At 37.5%, the city outranked New York state at 16% and Nevada at 15.7%.

Agents who sell in the District say that while some people have left, there are plenty who want to move there and the city is facing its own shortage of housing inventory. “I can’t get over the low inventory in the city, where everyone with high incomes kept those high incomes,” Dahill says.

As the arrival of the pandemic approaches the one-year mark, Bassin thinks “people are moving out to the suburbs from the city less and less now than they were in April through July.”

Anderson and others say it’s too early to know whether the number of people who are moving from Washington or other urban neighborhoods to the Montgomery County suburbs will affect housing patterns and whether there will be ramifications for other aspects of county life, such as transportation and school enrollments.

“Will there be some effect? Yes, but is it like the end of cities, or people are going to decide, oh, maybe driving everywhere sounds a lot safer to me than getting on the train or the bus, so let’s forget the whole thing and move as far away as possible from everyone else—I don’t really think that’s likely, either,” Anderson says. “And I certainly don’t think there’s a lot of data to support that.”

This spring, the planning board is expected to submit to the county council a draft of Thrive Montgomery 2050, the first comprehensive update of the 1964 general plan. It “envisions a county that is more urban, more diverse, and more connected,” according to planning department documents. The plan, which has been in the works for two years, is expected to move the county away from the car-centric community planning of the past. Its nine themes include providing “attainable housing for all” and rethinking “single-family neighborhoods near transit.”

Meanwhile, Anderson says the submission of development applications remains steady, noting that such plans are often years in the making, and developers most likely are anticipating that things will be different when they’re ready to move forward. The situation is similar to the aftermath of the 2008 recession, when approved projects “kind of sat on the shelf” while the economy recovered. “Then you saw a lot of new things happening seemingly overnight,” he says, especially in places like Bethesda, where construction cranes currently dot the skyline. “There was kind of a hangover from the 2008 crash that didn’t really work itself out until just the last few years.”

That construction boom has resulted in a surplus of luxury condos, leading to a softening in that market, real estate agents say. Schuman says the decreased demand led Washington Fine Properties to reduce sales prices in December at Hampden Row, a luxury condo development built in 2017 in downtown Bethesda. In mid-January, a three-bedroom unit listed by the company was priced at just under $2 million, more than $1 million less than when the unit was first listed in January 2018, according to Bright MLS.

The softening of the luxury condo market could be compounded by the hesitance of buyers to move into high-rises because of virus fears, as well as an inability to enjoy the available amenities, agents say. “It’s been horrible. I hate to be so dramatic,” Rice says. “But I have clients, they have moved into these places so they can be connected to their peer group and have a cohort to share stories and do talks and play bridge, and none of those things are happening. I have one client that moved, and every time I call, he goes, ‘Well, hello from jail.’ ”

Anderson says there’s “some evidence there’s some softness” in the market for that type of housing. “Rents are down in Silver Spring and in some of the downtowns in the region and across the country, but I’m not sure that’s so much of an issue” of potential residents not feeling safe in a multifamily building, he says. Rather, it’s more that they don’t want to pay higher rents when they can’t access a building’s amenities because of the pandemic, he says.

Some buyers looking for larger living spaces are seeking the convenience of living closer to D.C. Compass real estate agent Hans Wydler, who sells mostly in Upper Northwest D.C., Bethesda and Chevy Chase, says those clients are recognizing that close-in suburbs offer a “phenomenal” compromise. “You get the benefits of a suburban space, so more space, more accommodations, [and] the luxuries of 21st century living. You might have a car or two, your kids have lots of sports activities—you need space for all the stuff. It’s really a pretty good trade to be in a lot of these neighborhoods. You can walk to the coffee shop. You’re eight minutes in multiple directions to practically anything, and people are starting to figure that out again,” he says. “I don’t think it’s a short-term blip. I think it’s gonna be a longer-term sort of renaissance, but I do think it will be muted as the city starts to reenergize.”

Agents say the pandemic buyer often is looking for a home that can serve several purposes. “People want two home offices. They want a living level or living space for in-laws that they’ve either pulled out of assisted living or don’t want to put into assisted living. People are looking for room to teach kids at home, and recreation space,” Banner says. “If they’re going to have to shelter in place, they want the amenities to be able to have activities—[anything] from billiard rooms to indoor and outdoor pools, tennis courts, a play area, all that now is really sought after.”

As of October, the median sales price for single-family homes with a pool in Potomac increased 11% to $1.49 million from 2019 to 2020; in Bethesda, the increase was nearly 19%, to $1.75 million, according to Bright MLS data provided by Rice.

“When things ease up with COVID, I still think that people are going to change the way they live and commute and work, and I still think there’s gonna be an interest in that and kind of an eye toward, well, if something like this happens in the future, I’m going to set myself up in a place that makes sense and [where] I feel I can live and work and play,” Banner says.

Martine Bernard couldn’t take it anymore. Between the constant noise of leaf blowers in her family’s Battery Park neighborhood and the growing urbanization of downtown Bethesda, she was losing inspiration for her work as an artist and ready for a change. She and her husband, Reza Amirkhalili, wanted to find a place with more room and a location where they could slow down the “speeding freight train” of their lives with three active teenage girls.

So when she noticed last spring that the listing price had dropped for a seven-bedroom redbrick house in Darnestown that she’d had her eye on, she suggested to her husband that they take a look. “As soon as we drove in the driveway, before we even saw the house, I think we had a very visceral feeling. And we kind of knew. It just checked all the boxes,” says Bernard, 52.

The family bought the property and an adjoining lot, a total of 15 acres, and moved in at the end of May. Although they had started looking for a new home before the pandemic hit, the couple soon realized that the larger house was a “godsend” while the county was restricting activities. And the quiet of the wooded property has provided its own balm.

“Once we got out here, I feel like all of our blood pressures just dropped a bit,” Bernard says.

During the summer, the girls’ friends often came over to swim in the pool or hike in the woods. And Amirkhalili, 59, who is in charge of operations for a large commercial construction company and often travels for his work, discovered that he enjoyed being outdoors. Working from home because of the pandemic, he checks out the backyard pond after getting up in the morning.

“I thought I’d be bored” moving away from the bustle of Bethesda, he says. But he has enjoyed teaching his daughters to fish and working out by chopping wood. Still, he doesn’t plan to cancel his arrangement with a professional lawn service. “That would be a bridge too far,” he says dryly.

For her part, Bernard has found that she also enjoys working in the yard—and using the dreaded leaf blower. “So what I hated listening to in Bethesda, every day I’m doing it here,” she says. “But somehow it’s OK because it’s my satisfaction now.”

Contributing editor Julie Rasicot lives in Silver Spring.