Falls Church News-Press Summer Real Estate Guide 2021

FALLS CHURCH NEWS-PRESS | FCNP.COM

R EA L E STATE

SUMMER 2021 | PAGE 11

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Greater Interest Rates & Inventory Only Cure for Surging Home Prices

BY MATT DELANEY

FALLS CHURCH NEWS-PRESS

Characterizing the national rise in housing prices as a “boom” is starting to feel like an understatement as many parts of the country have witnessed nuclear explosions in listing price.

Interestingly enough, this rise doesn’t seem to be anything precarious akin to the bubble burst that caused the Great Recession nearly 13 years ago. In fact, these values are on much firmer ground, meaning you should expect the lofty price tags to stay until government policies and inventory woes can adjust.

“When we think about housing

inflation, we are actually thinking about the part of the house price that is related to the costs associated with living in a home, such as a place to sleep, eat and entertain.

But the other part of the home is the investment part.” said Michael Neal, a senior research associate at the Urban Institute’s Housing Finance Policy Center.

He continued, “What we have found in our work is that the change in the living costs has actually slowed, while we’ve seen a marked acceleration in the investment portion of home prices.”

What Neal is saying is that the rise in home prices will, more or less, persist. That spells trouble for broad-

er concerns about inflation. Politico reported this past weekend that high housing costs could push inflation two percentage points higher and slow the post-pandemic economic recovery.

Looking at the past year’s data for the Northern Virginia market shows how solid home prices have been.

The number of home sales in the region certainly hit rough patches in 2020, according to MLS data from the Northern Virginia Association of Realtors. Both April and May of last year saw 20 percent dips in the area, and in Falls Church, home sales were down both 21 percent (19 total sales in April) and 50 percent (16 total in May) compared to 2019.

STARTER HOMES are being gobbled up quickly by high bidders whenever they do hit the market. It’s made it hard for renters to transition into purchasing their first home. (P����: N���-P����) Yet home prices remained fairly stable. In April of last year, the average price of a home sale in Falls Church was just over $1 million; this April, that number was just under $1 million. And in May of 2020, the average price of a home sale was

around $850,000; a year later, that number would shoot up to $965,000.

The trajectory has continued to point up. For the month of June, usually the first month the market starts

Continued on Page 12

INSIDE: Family Rebuilds Home After S. Oak Street Fire in 2020 ���� 13 | F.C. Real Estate Market #s (insert) ����� 15

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PAGE 12 | SUMMER 2021

R EA L E STATE

FALLS CHURCH NEWS-PRESS | FCNP.COM

HOME BUILDERS are seen as one of the major players who can bring down home prices, but they’re challenged by hinky supply lines. (Photo: News-Press)

High Home Prices Continued from Page 11

to ebb a bit, Falls Church saw increases in both average home sale price and the number of homes sold year-over-year.

A large part of that is due to the policies put in place by the federal government (namely, cutting interest rates to historic lows) to encourage spending. Mortgage lenders responded by making their borrowing requirements more stringent, where they favored those with unblemished credit histories and people who could afford large down payments.

Stricter standards from lenders meant only the most financially secure could get in on the boom — those who were either already homeowners and had the latitude to refinance their mortgages, or those whose employment wasn’t affected by the pandemic, as Neal put it. Essentially, it’s been a competition between the “haves,” and not a race involving people who were at risk of defaulting on their mortgages a la the ingredients of 2008’s housing crisis.

Basic economics says if supply outstrips demand, then prices will naturally fall to try to meet people where they are. As you may have guessed, that means the onus for making homes more affordable has fallen on the builders who produce them.

That’s not as easy as you might think.

Jennifer Landers, the president of custom home builder New Dimensions, Inc. that focuses primarily on the Arlington-Falls Church-McLean area, has been experiencing difficulties with her own suppliers.

For example, one overseas supplier is crucial for New Dimensions to assemble windows back here in the U.S., but their in-house problems cause delays that in turn stall Landers’ company from putting together a new home.

Another example is the national resin shortage. The material, which can be used to preserve the wood sidings on homes, has been harder to come by, and it’s causing backups in Landers’ work as well.

New Dimensions is slightly different from other builders in that they typically construct a

home with a client in mind, rather than build a home and put it on the open market. But their problems with suppliers, and the rising costs of acquiring their goods, is a pain felt across the country.

“I’ve been on nationwide calls with other builders, and the problems are widespread,” Landers said. “The material pricing is widespread, but also the availability of materials is something everyone is struggling with.”

In her own conversations with suppliers, it’s a combination of both their struggles in acquiring capital (some overseas connections are having issues getting ahold of shipping containers), and for domestic manufacturers, it’s getting the necessary labor to come and work for them.

The result of all this, according to Neal from the Urban Institute, is fewer starter homes are being constructed. Renters who were looking to transition into one, Neal added, are getting boxed out by more well-to-do applicants.

The market will ultimately do what the market does, though there are a few things federal, state and local governments can do to make housing more accessible. Landers mentioned how the National Association of Home Builders has lobbied the Biden administration to loosen restrictions on getting lumber from Canada, which would transfer lower costs to consumers in the process.

Neal, meanwhile, said the City of Falls Church could partner with the state to receive funding for construction subsidies and look into relaxing its zoning laws to allow for higher density (think duplexes). Another possibility is creating some kind of down payment assistance for those who’ve historically been locked out of the housing market — such as racial minorities.

Then again, Neal also believes a lot of this could be remedied by the Federal Reserve’s mortgage policy.

“The wild card will be the trajectory of interest rates more generally,” Neal said.

“We’ve started to see mortgage rates soften a bit in recent weeks. As the Fed gears up for normalization, you know, over the next two to three years...higher house prices and higher mortgage rates could worsen affordability and cause the market to cool.”

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FALLS CHURCH NEWS-PRESS | FCNP.COM

SUMMER 2021 | PAGE 13

One Year Later, Family Rebuilds After South Oak Street Fire

BY PATRICIA LESLIE

FALLS CHURCH NEWS-PRESS

From the ashes of their house and belongings destroyed by fire, a Falls Church family is working to restore their home and begin living anew on property they’ve owned for 15 years on South Oak Street.

Sajeel Ahmed’s positive attitude, perseverance and smile are the strengths that embolden his family to keep on moving towards their goal to move into their new home this year — as well as a steely patience he cites as the key throughout this whole ordeal.

“You must have patience dealing with a contractor,” Ahmed says.

“They take their time. It gets stressful but patience is the main thing.

It’s going to happen, but it might not happen on the timeline I want it to happen. Not everything goes the same way every day.”

Since that terrible day in February 2020, it’s been slow going on the new house, but it’s going.

As the News-Press reported back then, fire officials believed it was a space heater plugged into an electrical strip that caused the fire.

The family is thankful no one

CONSTRUCTION is well underway at the Ahmed family’s new home, though it will be slightly bigger than it was before with an additional 500 square feet. (P����: P������� L�����) was seriously injured. His motherin-law was home at the time of the fire and, fortunately, she did not

wait to see if she could put it out, Ahmed recounted the day. Being a lady in her 80s, “she had the pres-

ence of mind to get out.”

When speaking to the City’s Board of Zoning Appeals in April of

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this year, Ahmed said that a neighbor passing in a car saw the fire and reported it. “The only thing we had left was what we were wearing that day,” Ahmed told the Board.

“It was an old house, like the ones you see in Falls Church City and Arlington,” Ahmed explained to the News-Press.

For a split second, right after the fire, the family did consider giving up their lot and moving on. “But we have good neighbors who help us whenever needed,” and “we just decided we wanted to continue to live here.

“Falls Church is an attractive place. We’ve lived here for about 20 years. Our three kids went to school here; they grew up here. We’re used to the area which made the decision easier to stay,” Ahmed said.

While maybe a bit uncertain of what to do next at the time, Ahmed and his family were rewarded by that patience with a thriving housing market now 17 months later. When the house was scorched last year, the median price of a home in Falls Church was just shy of $700,000. It now sits at around $950,000.

Continued on Page 15

PAGE 14 | SUMMER 2021

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SUMMER 2021 | PAGE 15

‘Patience’ Preached by Family When Navigating Through Whole Ordeal Continued from Page 13

His work as an information technology engineer and senior executive for the federal government, and his experience in contracting and management have helped him, his attorney, engineer, contractor, builder and architect make their way through the myriad requirements necessary to rebuild.

Ahmed has found challenges at every step, from the city, to the insurance company, to the contractor which would try anyone’s patience, but he says calmly, “it works out in the end.”

After a building permit was issued, after some bricks fell down during construction, after a stop work order arrived, Ahmed had to take his case to the Board of Zoning Appeals to plead for approval to build the new house on the old house’s foundations.

New setback lines from the original construction to the new caused at least a two-month delay in the process.

At the meeting BOZA mem-

ber John Misleh noted the neighbor next door had not endorsed Ahmed’s proposal like several other neighbors who had written the city in support of it.

Misleh wondered if that neighbor would support Ahmed’s project.

Without question, Ahmed replied, for the neighbor was none other than the Ahmed family living temporarily next door while they wait on their new house.

After hearing the story, 100 percent of the Board members gave Ahmed the go-ahead to rebuild.

To face an adversity like theirs, Ahmed recommends “patience, dealing with insurance, the city, the permits and zoning.

“Everyone is doing their job, everyone is doing what they need to do. It just takes time. It’s a process,” Ahmed said, and working for the federal government, he knows a thing or two about the process.

The family has not bought furniture for the new house, but they’ve got some time to shop. The new house is 4,000 square feet, compared to the old house of about

3,500 square feet.

“It was tragic and accidental.

The whole house was damaged [by fire, smoke, and water].” Insurance is paying for some of the damage, and Ahmed is paying the rest.

Almost every day he checks and talks with the contractor. “I want to make sure I know what they’re doing. Experience helps but contractors are contractors. They have so many jobs. Unless you keep screaming at them, they are not going to be there. They are doing something else,” as they were when we talked on Saturday at the reconstruction site.

Indeed, the weedy vines climbing the new walls of the home gave the impression the contractor had been doing something else for weeks.

Ahmed said “the contractors work at their own pace.”

He advises homeowners to check their insurance policies to make sure they have adequate coverage. “My insurance company has been good to me, and I would not change,” he said.

THE BULK OF THE DAMAGE the Ahmeds’ home suffered on that day in early February of last year. At the time, Falls Church City fire officials believed the fire was caused by a space heater plugged into a power strip. The fire consumed all of their belongings. (Photo: News-press)

Falls Church Area Housing Market — 3rd Quarter 2021 Report Zip Code Area Median Price Number of Homes Sold

Average Days on Market

22046

City of Falls Church

$978,863

36

6

22041

Bailey’s Crossroads

$344,000

50

7

22042

Sleepy Hollow

$700,000

61

7

22043

Pimmit Hills

$826,000

35

5

22044

Lake Barcroft

$657,500

22

11