‘Re-Estate’ and Neighborhood Revitalization: When and Why Is Profit Realized?

by HillNow.com Sponsor February 10, 2015 at 3:50 pm 2 Comments

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This regularly scheduled, sponsored Q&A column is written by Tom Faison of ReMax Allegiance at Eastern Market. Please submit your questions via email.

Pssst – I just heard from my friend, who heard from his wife, who heard at the gym, who heard while shopping at Safeway that a Whole Foods is coming to a neighborhood near you in just five short years! Ka-ching! Call the realtor, honey! There’s gold in those oh-so-organic, gluten-free, cage-free kale-infused bananas!

Way back when, years before Shaw had a Metro stop, but just after the decision was made to put one there, the neighborhood experienced a dramatic bump in housing prices. More than six years later, when the train actually came into the station, home sellers began losing their shirts while attempting to profit off the shiny new escalators. A down cycle and a crack-cocaine epidemic threw water on the fire, but Shaw was hit harder than most because profits from the Metro stop had been paid in advance.

A coffee shop is no metro stop, but soon after I started selling homes on the Hill, Starbucks was the thing. A strictly Irish coffee drinker at the time, I remember rumors that a Starbucks was coming to 3rd Street and Pennsylvania Avenue SE. Just the thought of it was cause for celebration — pounds of Folgers were dumped into Washington Harbor, but home buyers paid a lot for that macchiato well before they had their first sip.

A more recent example of early buyer exuberance has occurred around the much sought after, yet patience-trying trolley on H Street, NE. With only low-key claims of the clanging bells to come, the real estate drums started beating. The beat grew louder as track construction began, drowning out for the moment a litany of legal and logistical delays to come, exacerbated by the city’s very arbitrary deadlines.

Just over 12 years ago, I listed a lovely home off H Street NE. The 2-bedroom house at 1210 Wylie St. was listed for $55,000 but escalated almost 15 percent to a whopping $70,000 total purchase price! (Yes, it was happening back then too). More recently, we’ve broken the $900,000 barrier and are closing in on the $1 million ceiling. Looking at a shorter window, from trolley-talk to trolley-halt, bags of cash have come in on the tracks well in advance of the first streetcar rider.

Some folks have seen surprising profits. Below are a couple of my own sales around the Atlas Theater in the past five years:

In 2010, I sold 906 12th St. NE for $330,000, then doubled it for an investor in 2011 to $630,000, although he spent $170,000 on a “gut job” renovation. However, the folks that purchased from him? They sold it for $861,000 last year and hadn’t spent a dime on renovations or improvements; that’s a $261,000 increase in 35 short months (or approximately $250 a day for just enjoying the growth in the area, one new restaurant at a time).

C & S Development purchased 1009 9th St. NE for $300,000 in April 2012. The house, gutted and popped up, grossed $510,000 that same year. The new owners only stayed for 22 months and grossed a cool $120,000. At approximately $181 profit per day of ownership, I should have claimed “utilities included” in my online advertising.

So, I don’t believe the profit ship has sailed; there’s plenty of appreciation yet to come in and around the H Street Corridor. But, ironically, the gains won’t be as dramatic in the short term, after the train pulls into the station (with passengers) as they have been in the past five years

Unless … wait a minute! Just heard from an agent, who heard from an agent, that an agent saw a Trader Joe’s bag blowing in the wind near the 7-Eleven at 10th and H! (Here we go again).

The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of HillNow.com.


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