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Bethesda’s Luxury Housing Boom Only Going To Continue

by Aaron Kraut — June 7, 2013 at 1:25 pm 1,001 6 Comments

An advertisement for The Lauren, a luxury condominium planned for Hampden Lane, recently went upThe luxury housing boom delayed by the Great Recession is in full swing in Bethesda, even as some wonder about the need for more affordable housing in some of downtown’s much-desired areas.

Luxury condominium projects under construction or in the pipeline include the 17-story, 250-unit 4900 Fairmont, the 250-unit The Darcy/The Flats, the 60-unit Toll Brothers project on Hampden Lane and the 25-unit The Lauren planned for Hampden Lane.

At the annual Greater Bethesda-Chevy Chase Chamber of Commerce’s Real Estate Update on Friday morning, realtor Jane Fairweather said the first wave of resales in Bethesda’s existing luxury condo buildings has produced less than stellar results.

Fairweather said two of downtown Bethesda’s newer luxury condos — Lionsgate and the Adagio — sold out a little less than a year ago. There have been six resales at the Lionsgate and two at the Adgaio. Sellers got less money than they paid for the units in five of those eight cases.

The person who bought the first unit in the Lionsgate lost about half-a-million dollars on the resale, Fairweather said.

The average resale price for a luxury condo in Bethesda is $579 a square foot. The new condos coming in are asking for anywhere from $750 to $1,500 a square foot, including The Lauren, which is listing condos for $2.1 million to $7.5 million.

“I think that’s audacious,” Fairweather said.

Still, Fairweather told the audience she doesn’t think the so-called Bethesda Metro housing boom is a bubble because inventory is very low. Fariweather said a normal healthy market level is six months worth of inventory. Bethesda-Chevy Chase at between one and three months inventory in several zipcode. The national average is about four months.

The bigger issue for the Bethesda-area housing market could be affordability.

Fairweather cited a Montgomery County report that estimated a household income of $120,000 would not be enough to buy a house by 2030. Some one bedroom rental properties include income requirements at $65,000. Larger one-bedroom units can include income requirements of $86,000.

“There really is a shortage of housing that can accommodate workers all along the wage spectrum and if we can’t accommodate them they will not be here,” said Lisa Sturtevant a professor at George Mason University who studies local real estate trends and who served as the event’s keynote speaker. “That will have an effect on the economy.”

Another luxury condo is in the works for 4990 Fairmont Ave., at the site of the closed BP gas station. Chevy Chase-based Starr Capital and partners is planning a 17-story, 70-unit condo for the site.

Some other noteworthy real estate trends from the past year:

  • According to Fairweather, arts and crafts infill homes are “the new face of Bethesda-Chevy Chase.” In 2012 and 2013, 138 existing homes wore torn down and replaced with arts and crafts style homes in single family neighborhoods close to downtown Bethesda.
  • The difference in price for homes within walking distance to downtown Bethesda and homes that require car travel is significant: Homes within walking distance range from $2 million to $5 million. Homes out of range typically fall in the $1.2 to $1.8 million area.
  • The teardown trend sweeping Bethesda is good for longtime homeowners making profits off of sale prices. But Fairweather said “we are definitely losing affordable housing.”
  • Leigh Byrnes

    The teardown trend is also flourishing in nearby Kensington. I have to ask, is there really such a demand for more luxury condos?

  • Lisa

    I live in am apartment in downtown Bethesda right next to one of these construction sites and it has made my life miserable, the traffic the noise, and they are tearing down every single gas station, not sure what is up with that. Honest I have no idea why one would pay 2 million for a one bedroom in Bethesda, just don’t get it.

  • Teyo

    Does anyone else think the phrase on that sign “Residences from the several millions” is just super ostentatious?

  • BL

    What is the capacity rate at Lionsgate? That used to be the luxury condo way of life in Bethesda and I see lots of unlit windows at night, looks undernourished and undersold to me. I live in and love downtown Bethesda but I believe it is becoming overrated and over priced. Woodmont Triangle used to quaint and un-congested, so much for that these days.

  • Frank

    Isn’t Maryland close to DC, the money printing capital of the world? Go figure!

  • dawn

    What are they doing with that giant lot with the 2- to 3-story building that has been torn down on Old Georgetown Road near the YMCA? Will that be commerical or more single family homes?

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