Pockets of real estate in Prince William are in high demand as people move to the area in search of affordable housing—but construction of new homes remains slow in a renter's market, a county official said Tuesday.
As the county plans its financial future for the next several years, real estate is on the forefront of the agenda. There's some positive things happening locally with the housing market and jobs, said Steven Solomon, director of Prince William's finance department. The county seems to be going through a certain amount of healthy turnover, with foreclosures slowing down and more people snapping up lower-priced real estate.
"We have a very hot housing market in Prince William County," said Solomon, who gave a presentation at Tuesday's Board of County Supervisors meeting about the county's financial outlook.
What's in: homes under $300,000 and apartments. McMansions: decidedly out. New residents tend to look for inexpensive homes—which are not the easiest thing to find. 98.8 percent of homes listed under $300,000 sold in the month of August.
That number dropped off significantly for higher-priced homes: 48.4 percent of homes under $400,000 sold in the month of August. Just 29.5 percent of homes over $400,000 sold in the same month.
More Apartments, Less Condos, Rising Costs
With such a demand for lower-cost homes, one might assume that developers are also planning to build condos. But Potomac Supervisor Maureen Caddigan said that developers have told her they can't obtain loans from the banks for condos. The banks will extend credit for apartments—particularly in the Route 1 corridor—but not for condos of the same size, she said.
New construction is slow, though national developers have been attracted to Prince William during recent years. But despite the demand for inexpensive housing, developers have primarily built apartments.
"You would think if there's a demand, then someone would provide that supply. Clearly what's happening...is that developers do not want to build single family homes under $300,000. They're not interested in going in that direction," Solomon said.
Melissa Peacor, the county executive, added: "They're willing to build apartments, but they're not willing to build the single family units—because they can't get the money for them."
That poses a problem for the county as more people with kids, who might ordinarily buy a townhouse or a condo, opt for apartments instead. Prince William's school district has traditionally assumed for planning purposes that apartments will primarily attract younger people who do not have children.
"I see this as a challenge in Eastern Prince William to what we're trying to achieve with regard to traffic, the size of our classrooms, etc. This needs to be addressed," said Woodbridge Supervisor Frank Principi.
"This is going to make things worse in Eastern Prince William," Principi said.
Moreover, the cost of renting has risen significantly.
Do Buyers Have Unrealistic Expectations?
Realtors like Susan Jacobs, an associate broker at Prudential Pen Fed Realty, are very much aware of the trends that the Board discussed.
In an interview, Jacobs said that property in Prince William is in very high demand right now, mostly for properties under half a million dollars or so. Foreclosures and short sales in Prince William are way down. Prince William remains much more affordable than Fairfax, Loudoun, and other areas—but prices are relative.
"A single family home in Prince William under $200,000 is nonexistent, unless it needs repairs," Jacobs said. "And this is very hard for the public to understand."
And demand is high.
"This is the new market; this is the way it's been for the last six months," she said. "Each month the amount of inventory gets shorter and shorter."
For instance, Jacobs said, area code 20136 (Bristow), only has six weeks worth of inventory. People are attracted to the lower-priced real estate.
"If it's priced properly, it's going to sell quickly—and when I say quickly, I mean within a week or two."