Which one’s a better DC neighborhood to invest in?

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Topic: Which one’s a better DC neighborhood to invest in?

Real Estate September 27, 2012 at 10:45 am

Which one’s a better DC neighborhood to invest in?


I have a friend looking for a house in DC. We’ve spent a lot of time debating on what makes a good investment… I bought my house in 2000 in Columbia Hts for a really low price, after current renovations I’m doing, it’s set to be valued around $760,000 (appraiser’s estimate), a nearly 8x increase in value in just about 12 years, and the rental value will be pretty good in this neighborhood as well, for around $2,300 per unit. My friend is stuck on the idea that investing in a house in Capitol Hill in the $800,000 range is a better idea than investing $600,000 to buy a house in columbia Heights or Petworth. I don’t want to be one sided, so I figured I’d ask you guys and then point him to this thread later to show differeing points of view.
Though Capitol Hill is great, the investment cost is significant and prices for real estate have always been high there. I come from a background of “Buy low & Sell high” which has allowed me to find really great home deals, and now that Col. Hts. & Petworth have proven to be emerging neighborhoods with lots of younger professionals moving in, I think it’s a bit more progressive than traditionally strong Capitol Hill (Not including H st NE).
What do you guys think? Is investing $600k in Petworth/Col.Hts. better for property value and rental potential than investing $800k in Capitol Hill on a single family Row House?
Let me know what you guys think, also realtor comments would be highly appreciated!

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I don’t think prices in Columbia Heights have crested yet, but I think you’d get more appreciation in Petworth. We bought in Petworth three years ago, and we got a bigger and better house, for $100,000 less than what we saw in Columbia Heights, just 7-8 blocks away. I know that Petworth prices are booming (I figure my house is now worth 30% more than what I paid for it), but I think the investment potential in Petworth is still greater than in CH.

I agree with jth. Columbia Heights is nearly as expensive as Capitol Hill these days, and I’m not sure that the rate of appreciation is keeping up with that pace. Petworth, being relatively inexpensive right now, is a great place to invest if he’s willing to wait a while. 
My partner and I had a similar budget and ended up buying in Capitol Hill. To be honest, we never seriously considered Petworth and Columbia Heights because they were inconveniently located for our purposes and we don’t like the neighborhoods nearly as much. If you’e going to be living in the house while you wait for the value to appreciate it should be in a neighborhood that you enjoy, and perhaps your friend feels he’d be happier in Capitol Hill.
Prices in Capitol Hill have gone crazy in the past few years, but I still think it is a good investment. We’ve seen a lot of new businesses come to the Hill and flourish in the past 5 years, and I see that trend continuing. There is definitely more room for resturants and retail along Pennsylvania Ave, near the Potomac Avenue metro, and on 8th Street south of the freeway. The Near Southeast and Southwest development will bring more people over here as well, and hopefully will better link our side of the city to NW.
Capitol Hill still has room to grow, but I think you also need to consider general trends in where people are choosing to live. People are becoming less tolerant of long commutes, and Capitol Hill is ideally located for getting to work. Those who work on Capitol Hill, anywhere on the blue/orange line, or at the Navy Yard or DoT headquarters will find this location appealing. That’s a lot of people! And, as employers continue to move out to DC’s suburbs, Capitol Hill will be a desired location for those who want to live in the city but have easy access to Virginia or Maryland. Additionally, as more and more people choose to raise families in DC Capitol Hill will be among their first choices for its well-known family-friendly atmosphere. 
Certainly anything in Capitol Hill will be easy to rent out if he needs to. It will continue to be a popular spot for Hill interns, and its proximity to H Street will attract young renters. If he buys near the 90 bus line he can also use the direct public transit route to U Street and Adams Morgan as a selling point. 
I’m sorry my argument is so severely skewed towards where I live, but I do sincerely believe it’s a better investment than Columbia Heights (I don’t know enough about Petworth to make that call). However, as I mentioned earlier I think he should also consider where he would prefer to live and not strictly the investment perspective. 


Thanks Folks! Great feedback. Yes, we’re partial to where we live I agree. I don’t really have a bad commute to VA where I work from Columbia Heights though, but I go to Rockville Maryland all the time. I think moving to Capitol Hill would make that trip unbearable, there’s no easy way to get to Rockville from Cap. Hill…

I think another important factor to consider is the length of time of your investment. It’s hard to say whether the rate of appreciation will be greater at either location, but I would estimate that it would be Columbia Heights/Petworth. If this is a long term investment (20-30 years) the rate of appreciation may not be as important as the total appreciation potential, which may be greater with a SF in Capitol Hill. If it will be a primary residence, location preferences/commute/etc make it hard to answer because being happy in a home can be more important than the finances. I would also consider H St NE although that wouldn’t help much for the commute. I think you would likely see a substantial return on your investment with either decision. (I am a realtor)

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