“Starter Condos” on H St, NE start in the “mid $300,000’s”

Rendering via Urban Pace

From a press release:

“With a new streetcar service running along the bustling H Street corridor in Washington, DC, residents will soon be moving into 16 newly constructed condominium homes at 1115 H Street, NE. Wall Development is nearing completion of its five-story mixed-use development on the site of a former Woolworth store. Urban Pace, the city’s leading condominium sales and marketing firm, has begun taking reservations from prospective buyers.

1115H is designed to achieve LEED Platinum certification from the US Green Building Council. Its energy-efficient and environmentally friendly features will include a green roof, triple-glazed windows, wiring for potential electric car charging stations, covered bicycle storage, and a one-year “transit package” for new residents. Square 134 of Washington, DC is the project architect.

“The new condos at 1115H will offer more District residents the opportunity to purchase their own homes in the hip H Street corridor for less than the cost of renting comparably sized apartments in many DC neighborhoods,” said Lynn Hackney, President of Urban Pace. “Living in a green building that’s located in a transit corridor will help residents save money on transportation and utility costs, while they enjoy the shopping, dining, and entertainment options available all along H Street.”

Developer Stan Wall explained that condominiums are the perfect use for the 16,000 square foot building, which will include have about 3,000 square feet of ground-level retail space. Homes at 1115H will be priced from the mid $300,000’s.

Since breaking ground last year, Wall has worked with the nearby Phelps Architecture, Construction, and Engineering High School, inviting students to conceptualize their own designs for the site. “The students did an amazing job with this assignment,” said Wall. “One I liked, for example, created an interior arcade with retail kiosks.” Wall said he plans to continue working with the school beyond project completion to help generate student interest in pursuing careers in architecture, construction, and engineering.

H Street has undergone rapid revitalization over the last decade. Popular destinations include the refurbished Atlas Theater, Rock and Roll Hotel, Toki Underground, Smith Commons, H Street Country Club, Boundary Road, the original Taylor Gourmet location, and many more. The crowning touch for this resurgence will be Washington’s first streetcar service in more than 50 years, running along H Street between and Benning Road, NE, terminating at Union Station on the western end.”

73 Comment

  • Anonynon

    at what point is this a starter condo? A starter for someone making 6 figures?

    • As real estate goes, $350k for a one bedroom in a hot area is not bad. It’s a starter condo for someone. Mortgage calculator puts a $320k mortgage (10% down on $350k purchase price) at about $1600/mo. That’s a “cheap” 1 bedroom rental in a hot hood.

      • The $1600 does not account for condo fees, homeowner’s insurance, property tax, and any PMI that will be paid (and I’m assuming most first-time homebuyers will not have a 20% downpayment available to them). So that $1600 quickly starts creeping much closer to around $2000. Given all of that, finding a luxury apartment with washer/dryer in the unit and all of these other amenities, you are going to be paying over $2000/month in a desirable area.

        I still see it as a good investment for someone who is planning on being in the area for a few years and is looking to gain some equity.

      • But how much are the HOA fees? 350k with a 200/mo HOA (and that’s on the low side) is about $1900/mo. Still not bad in that scenario, but some of the HOA fees around town are ridic. (think $400+/mo) not inclusive of utiliites.

        • Yea, those amenities cost a fortune, but new buildings tend to start low. I’d think so esp. if they’re billing it as a starter home it probably doesn’t have a huge fee.

      • You’re forgetting PMI, homeowner’s insurance and taxes, about an extra $600/mo. Is it still affordable then?

        • I totally forgot about condo fees, AnonCityChick. Even if it’s only $200/mo, we’re now at $2400/mo. Sounds like a “starting to drain your wallet” condo.

          • Agreed. And I forgot about PMI, insurance, etc. Not sure if that’s such a great deal anymore.

          • is pmi 300/month these days? With high HO insurance and taxes we’re at 300 before PMI, and we’re assuming taxes will be at the purchase price and insurance is 50/month.
            I think it ultimately makes the most sense for a couple, but I think 2400 seems high.

          • $2400 a month? That’s how much I pay and my house cost close to $600K. Granted, I did have a 20% down payment and it isn’t a condo so you can eliminate the HOA and PMI from my payment…but jeez. It’s hard to believe a $350K condo would end up costing you that much a month!

          • anon 1.5, I’m assuming $30K down on a $350K place at 4.25%.
            Zillow’s online mortgage calculator (http://www.zillow.com/mortgage-calculator/) gives a pretty good estimate of your expenses for loan, PMI, taxes and insurance. Plugging in my actual numbers for our place came pretty darn close to what we pay. In this hypothetical case, PMI is about $200.

          • Wow, a 20% down payment on a 600k house. That’s insane. Good for you.

          • It was my second home purchase so the 20% down payment came from the sale of my first house. It would have been next to impossible otherwise. My first house was a $200K foreclosure whose value appreciated a great deal in a few years.

        • While PMI, condo fees, homeowner’s insurance, property taxes, etc. need to be considered, you’re also leaving out the tax benefits of ownership. I could imagine someone paying $10,000 a year in mortgage interest on this place, which could result in a $3000 lower tax bill. Add in the fact that property taxes are also deductible and you probably offset $250-300 a month of your housing costs with tax savings.

          And there’s always the chance (not guarantee) that the place will increase in value…not possible with a rental.

          • Exactly–those mortgage calculators never give the whole story. With an adjustment to salary earning withholdings you will be bringing in more money each month to account for the small uptick in expenses. When I purchased my condo in LeDroit 6 years ago for 350k with PMI, fees, tax, etc. my total expense was 2,100 a month, but with adjustments for the tax benefit, I was bringing home almost $400 more a month….and I still had taxes owed me at end of year.

          • And for those who don’t see how people find a downpayment, I then sold that condo for 430k and used the earnings to put 20% down on a rowhouse around the corner. That’s what a starter condo is. *plus I’m well in to my thirties now and make more money than I did when I was twenty-something purchasing a home. Homeownership in the DC metro area is still a solid investment if you choose to dive in.

          • You can also finance in PMI so you’re not paying an outrageous monthly fee and instead you’re paying a slightly higher interest rate. The interest is tax deductible and PMI is generally not, so it can be a good trade off.

          • Fair enough, but is $2100 for what is probably a 750 sq ft 1br (dividing 4 ~3000 sq ft floors by 16 apts) still worth it (we’re assuming a somewhat low HOA, here)? Also, don’t forget all the forward-paid taxes, closing costs, and fees at the beginning of the loan. For the first couple years, the owner will still be catching up before the “savings” start to really show. But by then, a “starter condo” purchaser might be ready to get out as well. I just can’t see how it’s worth it unless it really isn’t a “starter condo,” but a long-term purchase, and how many people want a place like that for 5-10+ years?

          • +1 PMI is quite a bit higher than it was 5 yrs ago, so financing in the PMI will generally be a better deal.

          • justinbc

            Considering I know people who live in a crappier neighborhood, in a crappier, much older building, in a smaller space, and still paying 1900ish for a 1BR, yeah, 2100 aint bad, if that’s what it breaks out to.

          • Here’s my issue, if many of us are looking at ~$2400/mo for a 1br condo as not worth it (tax savings and all the other financing tricks, notwithstanding), then why would the next purchaser want to pay considerably more? Imagine 3 or 4 years down the road, the owner wants to sell for, say $420K. Let’s assume similar loan numbers for the next purchaser, at a higher interest rate, maybe 5.5% (we all know rates will rise in the next few years, due to Fed Reserve plans, devaluing dollar, etc.). We are looking at another ~$700/mo above the original loan + xtras + condo fee, and this doesn’t even include the rise in condo fees each year. Who will pay ~$3000+/ mo for that place? No, prices will have to stick with inflation at the very best, or drop.

          • justinbc

            Are you arguing that home values don’t rise over time? Have you paid attention to the prices in this neighborhood at all?

          • That’s a 20% appreciation in under 5 yrs…that is probably not realistic this late in the H st game. I’d never buy a one bedroom unless it’s an amazing deal or I planned to rent it out. The ability to have costs offset by roommate is just too great. I don’t think this is at 2.4k now nor at 3k in 3-4 yrs even with higher interest rates.

          • justinbc, what I’m asking is who would want to pay considerably more than numbers that are arguably already too high? What makes the rise in value such a sure thing? I’ll argue that home prices more or less rise with inflation, with bubbles and bubble bursts along the way. DC benefits from “Washington” (i.e., its Federal Govt centric economy) and so we didn’t really experience the bust like the rest of the country as a whole. So, I suppose there is that. But, let me phrase it this way: Would YOU pay $3000/mo. fixed costs for a small “luxury” condo? Is that acceptable to you even 4 years from now?

          • justinbc

            FWIW it’s hard to evaluate the worthiness of any of these units until they’re actually completed. The finishes touches in buildings and units can add up to quite a lot of differences in values.

          • DK: Same thing happened/is happening in Logan. Demand to live in the neighborhood as only continued to rise as the area has improved; people continue to pay (arguable ridiculous) prices per sqft to live next to certain amenities. Why do you think a similar thing can’t happen with H st over (likely considerable) time?

          • DK, I hear your question and I would argue that people will pay it. People will pay whatever it is worth–and city living was never a real option for most upper middle class and upper class people in this region until the last 10 years–they kept their money in Fairfax and Montgomery Counties. People pay more than 3k for the same amount of space in most major cities. I argue on this blog all of the time that housing in DC is still undervalued compared to Boston, SanFran, LA etc. (NYC being the obvious). Not saying 1br condos will sell for 3million like in NYC anytime soon, but people would never have thought that my 800 sqft condo in Ledroit would have sold for $430k when I bought it 5 years ago not to mention 10 years ago when rowhomes in this neighborhood were selling for below 200k.

          • justinbc

            DK, to answer your question, no, I wouldn’t. But I’m not really their target demographic. I wouldn’t pay much of anything for a condo because I don’t really like condos, I like rowhomes. And even condos that are in rowhomes are not for me, I want the whole thing. You can’t just look at DC as whole one homogeneous region, the market is very neighborhood specific and although H St area has already appreciated a lot lately it still has a long way to go. That’s the theoretically value/increase you’re buying into.

          • Anon, over a “likely considerable time,” inflation will eat up most of the price rise. I guess the point I didn’t make well enough is that a “starter condo” is not a “considerable time” proposition in the minds of potential buyers. They’ll buy, then be ready to move on in 2 years minimum (to avoid capital gains) to maybe 5 years maximum. The proposed costs are arguably too high already, which means little to no room for prices to rise quickly enough over such a short time, to make it a worthy investment. My feeling is that many of those folks will be in their small, expensive condos longer than they’ll want to be, until “considerable time” passes.
            Regarding Logan Circle, Zillow tells me right now, that 33 out of 37 condos for sale in ZIP 20005 are listed at “pre-foreclosure,” or, short-sell, prices. So, things aren’t quite what they seem there.

          • Sorry, I read that wrong. There are 37 Logan condos for sale, and 33 more ready for short-sell. Still not a good omen.

          • justinbc

            Almost nobody selling a home, whether house or condo, after 2 years would turn a considerable profit. Most experts say you need at least 4 to 5 years to cover the taxes alone. If you’re basing this whole argument off of a hypothetical person with undetermined values or timelines there are really just too many variables to account for.

          • DK, I only found 10 in my search–we maybe used different radiuses–the reality is that foreclosures are a normal part of the real estate market and simply finding they are present is a false indicator without further examination. I would challenge that those units, even in short-sale, will be re-absorbed and sell at market rate and the bank will not take much of a loss.

          • “Most experts say you need at least 4 to 5 years to cover the taxes alone.”

            Which is why billing these places as “starter condos” at such a price, for such a space simply does not make them a good value. I don’t think my timeline and variables are off base for what most buyers would want to do with these places in five years. Maybe they’ll refinance and rent them out at that time, but the profits will be thin. These places don’t seem the best way to tie up your money, IMO.

          • Caleb, my search was specific to ZIP 20005 (condos only, mind you, for comparison here). Sure, a first glance doesn’t give you much, but when I see half the available condos for sale about to be foreclosed on, it can’t be a good thing.

            I don’t know about you all, but I’m ready to wrap this up, getting late! We’ll just have to see what happens when the places in question come on-line.

          • The reason it feels like they are half of the market available for sale, is that the demand for property is so high, they get snatched off the market so quickly. The average home remains on the market for less than 30 days in that zip code.

            If you’re definition of a starter home/ condo is less than 5 years, you don’t understand how serious real estate investors work. I’m with Justin–for once–that you are selecting variables that make sense to you, who I assume is not in the market for a home or sounds like you will be anytime soon and not serious buyers. I purchased my one bedroom in LeDroit 5/6 years ago thinking I would be there ~10 years and then be able to get something larger. The reality was that the DC market appreciated and recovered so quickly after the downturn–I bought in the downturn– that I had a ton of equity in less time than I expected. On top of that, I didn’t factor how much my income would increased over 5 years; after my then 5 years of work experience to now 10 years.

            We can agree to disagree, but the wait and see will not only be how these sell, but how much they will sell for in 5-10 years. Just remember this conversation when that time happens. You sould like all of my friends who thought it was crazy to buy anywhere in DC 12 years ago, in Logan 7 years ago, LeDroit 5 years ago, Truxton Cir/Shaw 3 years ago and now here we are with the debate about H Street.

          • Hey Caleb,
            For the record, we happen to own a couple rental properties in DC proper, paid in full, and, together, returning just over 10% annually after all expenses, but before taxes. Our current place will become our 3rd rental property fairly soon, as we then go for a single family home; in the very close suburbs, however. I know a little something about real estate investing – for holding, anyway.
            Contrary to your assertion, I assert that the problem here is that you’re thinking about these places like a real estate investor, not as a person who feels the need to buy before they’re “left out,” as witnessed by the dubious marketing angle of “starter condos.” The prices folks buying these new places should expect to pay are, all-in, already comparable to Logan Circle prices and/or rent for similar space. How much higher can these prices really go before folks look elsewhere? This isn’t a case of getting into a neighborhood cheap like in the other neighborhoods you mentioned. This is ALREADY pricey. I don’t see much more room for prices to rise, at least for this development, so anyone hoping to move on after becoming a 1st-time owner may very well be in for a rude awakening.
            You sound like my friends 7 or 8 years ago who thought that housing prices would continue to rise forever, never mind the HUGE bubbles being built on real estate and credit default swaps. 🙂 Now, never mind that the areas’ economic engine, the Federal Govt, is cutting back heavily on a major part of DC’s job market, federal contracting, and that the recent federal budget that relaxes regulations on these off-the-books bank practices that already got us in trouble 6-7 years ago benefits institutions that are even more too-big-to-fail. Nope, nothing to see here.
            You’re right, however. We will need to see how these places sell initially, then how they re-sell down the road to get the true picture. For those looking to buy in, I hope your assertion is the right one. Cheers!

          • DK, you think you can purchase a brand new condo in Logan Cir for 350K? This is the area you will find a brand new condo in the original Federal City lines for that price. This is the cost of new construction one bedroom condos across the remainder of the city east of NW. To say that this is what the value of homes are in Logan is again not true. You may be able to find an older unit without central air and laundry in a basement, but not new construction (something built in the last 10 years). I am arguing a prior point, but I will say it again, that DC is still catching up in what you think is expensive–I think DC is still cheap, so I do not think it has reached a ceiling. It is still more expensive to purchase a new home in the suburbs of Maryland and Virginia than it is in DC–yes, square footage is less in the city, but in no other region is that true–Boston, San Fran, NYC, Chicago. This is one of the last major cities to grow its downtown. You have 7 of the 10 wealthiest counties in the country outside of Washington DC….yet you think $350k is a lot for a small condo under a 1/4 of a mile from The Capital? You can quibble with Congress over cuts, but the bottom line is, they can not get rid of the Federal Government. This area has been flush with cash ever since Washington proposed the new Federal City be built here. That money has never really remained in DC–it built Maryland to be the richest state in the union and built Northern Virginia from nothing. DC had no self governance (the little we do have now) until 1975 and before that, Congress did little to govern the area to create services that people wanted to make it an attractive place to live. Now that there is a Mayor and City Council and they have worked to clean this city up over the last 30 years, it is primed to take back some of the market share that MD and VA have eaten up since its inception. That Whole Foods opening down the street from here is not moving in for nothing.

          • I agree with Caleb’s Dec 17 11:18am posting. When I arrived in DC in 2000 it seemed pretty clear that DC was both under-developed and undervalued. I, like many other foreigners, was shocked that DC was in the state it was (outside of a small pocket within NW) and yet was the capital city of one of the world’s most powerful nations. DC has come a long way in the last 15 years and it still, frankly, has a way to go. As the three other quadrants get better amenities, availability of services and improve overall, their value is going up and should go up. Logically, it is some of the stale and ordinary parts of NW that should decrease in value or remain stagnant because they won’t be able to compete with the more dynamic and new offerings in the eastern and southern neighbourhoods. Whole Foods is indeed opening at 6/7th and H St NE for a reason.

    • Starter condo for someone who’s taken time to plan and save for home ownership. You can certainly do that on a more standard young professional income.

      • Wouldn’t even want a one bedroom condo as a “starter.”

      • maxwell smart

        save for home ownership? hilarious. Maybe in 30 years when I’ve paid off the $90,000 I owe in Student Loan Debt I can afford to purchase a home.

        • I have to assume you’re dealing with private loans you cannot refi/consolidate under Dept of Ed….otherwise, it should be doable at that level. I’m speaking from experience here with a lot more than 90k.

    • Certainly for someone making more than the average wage…but you could easily afford that at 75k.

      • Not if you have significant loans, and want to enjoy living in a city, which most people do.

        • justinbc

          Not everything is for everyone!

        • Not true. You can enjoy the city, own a home, and have significant student loan debt. It’s quite easy actually. The latter’s payment is really the biggest hurdle, but it isn’t treated any worse than a car payment.

          • It’s not treated any worse, but it’s still going to have a significant affect on your personal DTI max limit in the underwriting. Most young people I know in DC are coming here with $100K+ in graduate student loan debt (hi, lawyers!). An $800/month payment has a huge effect on the price of the home you’re able to afford, even on a $100K salary.

          • OP Anon – which is why if you’re planning on buying a house soon, you should set your loans to the 30 year repayment plan and then just make payments (assuming no prepayment penalty) like you’re still on the standard 10 year plan. This will give you a much lower DTI ratio when the mortgage broker pulls your credit report.

          • I have far more than 100k…I’m a lawyer, and my payment is under 400/month. I consolidated with the Dept of Ed. and use income based repayment. To pay 800/month you’d either have to have loans that Dept of Ed won’t touch or you make a LOT of money.

          • justinbc

            Anon 1.5, yeah, I’m guessing lots of people have private loans and are getting royally screwed on the interest rates. One of my exes was paying like 28% or something on one of hers before I got it consolidated for her.

          • Glad she got out of that. 28% is higher than my first CC at 18 with no credit. Yikes!

            Private loans…how do people get sucked into those things…bad credit? a long time ago before public was more available? Etc? I’m curious, but I hope with the reforms most people won’t end up in the same boat.

          • justinbc

            My understanding was it was a combination of taking poor credit products that go bad which spirals into worse credit etc which just winds up with you continually getting a worse deal in order to keep paying the bills. It’s a lot like the payday loan scam, except they’re doing it to 18 year olds with little to no financial experience. Hearing some of the stories I do in DC I feel lucky to have escaped undergrad with no debt, and grad school with only $60K debt.

          • I hope to be able to help my child go to college, but at the least I’ll set them up for financial preparedness. I have a lot of grad school debt, but it’s manageable. I had minimal debt from undergrad. I’ll consider myself lucky to have public loans in the late 2000s when some kind of reform kept me from getting screwed by loan companies.

  • I’d sell my my starter condo for the mid-3’s … and it comes with a NW address! Though the view is a concrete wall, the ceilings are Hobbit height, and the only retail you’re close to are drug markets.

  • Anybody got a recent photo?

  • With this area having a high military/ex military presence can easily get a VA loan and don’t have to pay down payment nor pmi and would make this very affordable and possible for future rental.

    • Good point. Navy Fed also offers a zero down payment, no PMI product for first time home buyers who are members (not a VA loan, so military duty is not required – you can just be a family member of an active duty solider).

    • Yes. Even for non-military, it really is not that hard to get a variety of loans that require very little down–0-4%. If you think otherwise, you haven’t spoken to a mortgage broker and you’re just using your best guess.

      • Yes, this exactly. People see these prices and think “Oh how will I ever save X amount that’s 20% of some large six digit number but there are A LOT of programs – some private, some run by the DC government – that will help first time homebuyers afford a place like this. Shoot, DC has assisstance programs that don’t phase out until household income is around 131K (~200% of AMI).

        • While I think someone who really wants to own should search these things out, I feel there should be more info put out there. Maybe as a part of area college or grad programs. I didn’t really find out about all the programs until after I bought. I didn’t put down a ton, but I could have probably gotten a nicer place at that time.

        • I agree with your comment anon 1.5. I knew to look because my parents were really educated in real estate and guided me in a general diction, but I also chose an awesome realtor. So many times I see people choose a realtor because they “like them”–and I hate to say, because they were attractive. It’s important to like your realtor of course, but if they don’t come to the game ready to educate you and they’re not telling you more than you already know or they don’t have much time to spend with you or they aren’t directing you to strong lenders–they’re just as useful as Zillow. Also, ask your friends or colleagues who have purchased a home–and don’t assume that they just inherited a fortune. If you’re just talking with your friends who aren’t homeowners, you’re not going to get much out of them. The bottom line is, it’s not that difficult to purchase a home if you have a solid salary and decent credit (not even perfect). As a friend told me years ago–it can be more difficult to get a car loan than a home loan. It’s far easier for the bank to snatch back your home and recoup their loss than a car that depreciates the moment you drive off the lot and the risk they take on you not crashing it every time you take it for a spin.

  • Put aside the price. Look at those floorplans. Units with no space for a dining table, no linen closets, tiny tiny coat closets, hardly any storage space.

    • justinbc

      It’s a “starter condo”, not a rowhome.

      • So? Starter homes can’t have decent storage? Look at the floorplan of any 1bd built in the 70s or 80s and you’ll see how dramatically living spaces have shrunk. True, kitchens have gotten larger and more open, but that’s come at the expense of the rest of the unit shrinking.

    • The bedroom closets look pretty large to me. Yea, you cannot having a huge dining table, but there are plenty of small ones with a leaf or 2 made for small spaces. I’m sure if my friend in a studio can have a dining area, they could manage it in 650 sq ft. Do you need a separate linen closet if you have a decently sized bedroom closet…probably not in a 1bed.

    • I know I’m an outlier, but my place has a very similar floorplan, and I’ve managed to stay in my “starter condo” for almost 18 years now…. It depends on how you like to live. I don’t like having stuff for the sake of having stuff.

  • Monthly all-in cost of this place are going to be lower than rents for the new construction on H Street. It’s an obvious good deal for anyone planning to be in the apartment more than a couple years.

  • I was searching the press release above, and the term “starter” appears nowhere in there. PoP, was this your term?

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