Smart Growth Forum Reveals Stunning Land Value Increases in DC

by Shilpi Paul

On Tuesday night, the Coalition for Smarter Growth kicked off their Walking Tours and Forums series with a discussion about walkable neighborhoods. Chris Leinberger of Locus Development, Ed Lazere of the DC Fiscal Policy Institute and David Bowers of Enterprise Community Partners met to discuss affordability and access issues in urban, walkable neighborhoods. In DC, as well as other cities, walkable urban areas are becoming more desirable than sprawling suburban ones, and the rapid increase in land and housing values are leading sought-after sections to be out of reach (cost-wise) for more and more people.

As you might expect from an event hosted by the Coalition for Smarter Growth, the talk had an urbanist, pro-walking, anti-car slant. Here are a some of the more interesting sound bytes and statistics:

The Increase in Land Values in Certain Sections of DC is “Stunning”

Chris Leinberger dropped a staggering statistic regarding how much DC land values have increased in the past decade. On one particular site in Capitol Riverfront, he shared, the land value was probably at around $5 per square foot a decade ago. That same land was recently sold to Toll Brothers at a cost of $825 per square foot. “That increase is stunning,” he said.

DC’s Supply of Housing in Constrained

In part because of zoning regulations and the height limit in areas surrounding the downtown core, supply in DC is unusually limited, keeping the costs up. Leinberger was heartened that both are under discussion. “We have to understand that zoning isn’t handed down from God,” he said. “We made it and we can change it. Creating more walkable urban places with drive down land values.”

No Car, More Money

“If you remove one car from your household, you can increase the mortgage you can afford by $150,000,” Leinberger said last night, based on car payments, insurance payments and monthly gas outlays. Another interesting car-related fact from Leinberger: If a city reduces car ownership by 15,000 owners, $127 million stays in the city.

The Lack of Affordable Housing Must Be Addressed

Ed Lazere pointed out that DC lost half of its low-cost rental units and 70 percent of its low-value homes in the last ten years. In 2000, half of the apartments in the city rented for $700/month or less, a rate that seems unbelievably low now.

David Bowers told a few stories of long-time residents getting pushed out of their homes in rapidly-developing neighborhoods like Columbia Heights and Petworth. Now, organizations are starting to look to the new frontiers — Anacostia and Congress Heights — to start helping residents stay put. “It’s a preservation and resident displacement prevention initiative.”

A few of the possible solutions discussed include supporting Choice Communities (formerly known as HOPE VI), a program that turns housing projects into mixed-income projects; supporting the creation of accessory dwelling units or “granny flats”; and funding the Housing Production Trust Fund and programs like the Home Purchase Assistance Program and the Tenant Opportunity to Purchase Act.

Lazere also mentioned the significant increase in tax revenue that the city has seen as the median income has risen. It is possible that DC will announce that they have a $400,000 surplus in their budget, and while the current culture is to save every penny, he said, that money may be better utilized by being invested into affordable housing support programs.

This article originally published at http://dc.urbanturf.com/articles/blog/keeping_dc_affordable_takeaways_from_a_recent_forum/6553

7 Comments

  1. Calvin H. Gurley said at 6:18 pm on Wednesday January 23, 2013:

    Leinberger was heartened that both are under discussion. “ Creating more walkable urban places with drive down land values.”


    I totally disagree. Increase in housing inventory will just bring more profits to sellers; this city has never experience a decrease in rental prices – even during the Clinton years of prosperity. It is just greed…the today’s business culture.

    Incidentally, in the discussion there was no focus on D.C. Real Estate Companies who in my estimation have ‘artificially” driven up the “price” of housing without a conscious.  Real estate agents fees have increased even in the time of the Washington Metro area housing boom.  Real estate companies have unconsciously pushed the price of a house well beyond the housing inspector’s estimates and past the true intrinsic value of a home.

    It is craziness that real estate agents are creating a Barrett-Jackson Automobile type auction that only the wealthy can participate in. There are too many examples of a potential buyer offering $50,000.00 above the asking price just to lose the sales contract to a second buyer who over bid the first buyer’s offer-by thousands of dollars. But, is there a potential flip in the making?*

    However, I strongly believe that D.C. real estate is a ponzi-scheme. Currently, many several year old home owners are just waiting for the right time to flip their D.C. residence to relocate to a better living area– that has wonderful schools, less street crime and less racial diversity. 

    I believe one scheme is to entice new home buyers to the H Street, N.E. area by building the H Street Trolley System. This new development will increase the already “stagnant” at ceiling home prices in that area so that a housing-flip would be possible to create a flight to the “land of milk and honey” - Virginia or Montgomery County, Maryland. 

    *Lastly, a financial note.  The Washington, D.C. housing market is the hottest and more promising investment instrument currently beating any investment stock futures on New York’s Wall Street.  The country’s financial confidence is struggling for life; it is “now” all about the Benjamins.

    Calvin H. Gurley
    Member – Mayor’s Blue Ribbon Commission on Housing.

  1. Jason said at 9:07 pm on Wednesday January 23, 2013:

    Wow! Shocked to hear someone on the mayor’s commission thinks of VA and MD counties as the land of milk on honey - or at thinks others moving to neighborhoods like H st NE feel this way.

    Most people I know moving to these neighborhoods love DC and couldn’t imagine living in the burbs…anywhere USA. 

    BTW - H St. NE housing prices are not stagnant.  They have been steadily increasing for years and will continue to do so with or without the streetcar.

  1. CalvinNeedsAnEconClass said at 11:33 pm on Wednesday January 23, 2013:

    “Increasing the housing inventory will just bring more profits to sellers”....what?  When does increasing the supply of something while demand remains constant ever increase the price?  Scary that this guy has any potential influence on how taxpayer dollars are being spent and/or housing policy…

  1. Calvin H. Gurley said at 1:07 am on Thursday January 24, 2013:

    1.  When does increasing the supply of something while demand remains constant ever increase the price?  Scary that this guy has any potential influence on how taxpayer dollars are being spent and/or housing policy…

    First, taxpayer’s dollars are not totally being spent, but tax breaks (seven years tax abatement programs) are the driving force for this new, over- crowding and expensive housing development in this city. As quite as it is kept, the behind the door meetings have planned to have this southern town reach the one million mark as for the number of residents living in D.C.  That means crowded conditions, infra-structure failures (Bloomingdale flooding) and a New York City mentality that a life is meaningless. Are you knowledgeable about the plan for ADU’s?

    Sir, please attend TENAC meetings and/or research more about the history of housing development in this city. This city defies all economic equations and theories and you would have change your thinking if you have lived in this city from the 1970’s to the present. That being said, it is foolish to use school taught subjects to establish a position against the realities of the real world, especially trying to define the D.C. area housing market.  There was a middle class housing policy and one that comfortably housed working families, but now there is this goal to reach one million residents and to push out the working class resident.  What do you know about the D.C. rent control policy past and present?

    I was raised in Old City (now Capitol Hill East – a block down from the old D.C. Jail site) and my mother’s row house on the 1800 block of Bay Street, S.E. is valued more than my single family home (3,200 square feet with a garage and a fireplace) in Takoma ( 5th & Underwood St. N.W.). Economics can establish no reasoning for this disparity in property values.

    I will say it again there are two inner-workings happening in this city; 1) those newcomers who buy into the media’s hoax that paints D.C. as being a grand New York City and 2) investment savvy homeowners.

    The number ones will surely find out that city life in the District is no place to raise a family (poor schools, the high number of street crimes, and high levels of lead in D.C. drinking water) and who find no value in the diversity of residents.  The number two’s are smart investors.

  1. Calvin H. Gurley said at 1:32 am on Thursday January 24, 2013:

    Mr. Jason stated.
    1.Shocked to hear someone on the mayor’s commission thinks of VA and MD counties as the land of milk on honey - or at thinks others moving to neighborhoods like H st NE feel this way. Most people I know moving to these neighborhoods love DC and couldn’t imagine living in the burbs…anywhere USA. 

    Mr. Jason, I really do not mind to enlighten you with facts that would take a new D.C. resident years to find out on their own. VA and MD counties are the land of milk and honey when it comes to a quality education for children. It will take District’s schools at least 15 years to reach the educational level that offers children a decent education.
    However, it will take an additional 15 years for those improving D.C. schools to compete with VA and Montgomery County schools’ quality of education.  Do you have the patience to endure this renaissance? Are you willing to risk your child’s education on waiting for improvements in the D.C. public school system?

    There are a lot of single people moving into the District who will be challenged with raising a family in the District. And, then there are those folks who have raised their children to adulthood and would state (as I agree with you) that, “… [ I] love DC and couldn’t imagine living in the burbs…anywhere USA…”

  1. CalvinNeedsAnEconClass said at 11:03 am on Sunday January 27, 2013:

    So instead of answering the simple question about supply and demand you rambled on about various DC government programs, which are the problem to begin with.  (Arbitrary building height constraints, inclusionary zoning, etc.)  I don’t care about what will happen to ADUs, honestly.  They manipulate prices in the market.  Market rate buyers just pay more to subsidize the cost of the ADUs - why should some buyers get this special privilege while others don’t?  Thinking the developer somehow “eats” this cost is naive.  If government workers can’t afford to live in DC then they will have to be paid more.  This is much simpler, cleaner way addressing this issue than a convoluted process of requiring a developer to build certain low price units, create a government department to administer the program, enforce rules, etc.  I’ll stick to the “school taught” principals of economics that are proven and suggest you do the same rather than complain about “tax payer dollars not being totally spent”, which is just a bizarre statement.

  1. throwsatfeet said at 5:21 pm on Monday January 28, 2013:

    From my perspective, the DC real estate boom was the result of two coinciding trends.  1) The exponential growth of gov’t spending in the 2000’s creating massive wealth throughout the metro area and 2) A return to city living by many of these same newly wealthy residents.

    We are still in the process of reaching an efficient real estate market as there are enormous disparities between housing values East and West of 14th St. NW.  For no apparent reason, 16th St. is significantly more expense than 12th St., and this is setting off a wave of speculation travelling East & North. 

    As one of the Eastern speculators, my guess is that the sharp land value drop line will eventually migrate from 14th St to North Capitol Street in about 20 years, with everything to the West selling at approximately the same $ per square foot. My rationale being that you can still realistically walk to downtown DC West of 1st Street, but North Capitol seems to be too far away from everything to make it a walkable neighborhood.

    I agree with the urbanists that walkability to downtown DC will continue to be the key driver in soaring real estate prices across the city.  Not having to take the metro or own a car dramatically decreases annual expenses and therefore should be reflected in housing values.  Strangely enough, this is not the case in DC.

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