Out and About - The horns of a dilemma

On one horn, see a condo or co-op. On the other, a single-family home. Buyers often wonder which makes the most sense. The answer comes in two parts, the most complex of them difficult to ascertain at this particular moment in the real estate market.

The conventional wisdom has been that single-family homes hold, or even, increase their value better than apartments. However, for a number of reasons, that perception was correct only before home ownership rose to unprecedented levels: Low mortgage interest rates and "creative" financing made renting an almost indefensible alternative; demographic and social shifts caused home ownership to become fashionable, even trendy; investment returns in the stock market were pallid by comparison with the annual appreciation of apartments and single-family homes; and developers responded to consumer demand by vigorously adding to supply.

Since the purchase price of condos and co-ops, which usually are smaller than single-family homes, is relatively low, the foregoing changes have propelled apartment prices upward. Their cost per square foot of living space has skyrocketed way beyond what single-family homes often command. When developers built, consumers kept on coming. It's about first-time buyers and downsizers choosing a more urban existence.

The basis of the conventional wisdom is that an apartment generally lacks distinctiveness. Homes can be actually unique, whereas most condos and co-ops are like most other condos and co-ops. There are differences, of course, but virtually each apartment in a line is going to have the same layout as every other one in that line. Building to building, there may be few differences as well. Even in small condo conversions, as regular readers may be weary of seeing in this newsletter, the sameness of granite countertops, stainless steel appliances, marble-tiled baths, gas fireplaces and recessed lighting can be blindingly boring. Yet the prices and convenience of such real estate obviously have wide appeal.

This little meditation was intended to put to rest the uncertainty about which investment is the better. But the statistics right now are, alas, a muddy mess. In the District, apartment prices in March were 3.1 percent lower than they ended last year; for single-family homes, the decline was 5.9 percent. In Montgomery County, the price of condos and co-ops in March went up 2.9 percent, but home prices increased 5.6 percent. In Alexandria, apartment prices soared 8.4 percent, and single-family homes slid by 2.5 percent.

What no one knows is which way the market is headed. Based on rising interest rates, greater government concern about easy money for the under qualified, and the mushrooming supply of new apartment buildings, the betting here is that both the prices and appreciation of condos and co-ops can only fall behind that of single-family homes. It's already starting to happen in Montgomery County, where the growth in unsold apartment inventory is substantially outpacing that of single-family homes. At the same time, last month's apartment sales were off by 8 percent compared with the preceding March, while home sales activity decreased by 6.4 percent. In D.C., condos and co-ops still in search of buyers at the end of March was up 234.4 percent compared with 113.6 percent for single-family homes, though respective sales were down 11.4 percent versus 12.2 percent. Alexandria's inventory of active listings rose by 108.3 percent for apartments and 196.4 percent for homes, and sales fell by 9.4 percent and 2.3 percent respectively.

Beneath these figures, in a period of elevating interest rates, however low by historic standards, expect demand for single-family homes to grow and that for apartments to slide.

Okay, that's the economics. Now, finally, for the answer to the second question posed at the top of the page. If it's property that a buyer plans to live in, the only answer centers on lifestyle. If apartment living appeals to the buyer more than home ownership, then that is all the analysis a buyer needs to conduct. Simple, right?

The inspiration for these comments centers on two properties seen this past week. One is a beautifully renovated corner semi-detached 1910 home with a total of four bedrooms and three baths, front porch, patio, deck, upscale in-law suite, tin ceiling, Corian kitchen counters, gas fireplace, hardwood floors an attached garage and a location northeast of Lincoln Park. Everything about this home is appealing, including the family room, efficiently designed kitchen, décor and 2,701 square feet of space. This rowhouse on a bus line to downtown from extended Capitol Hill should easily fetch its price of $664,000. Per square foot, the cost is $245.

The second property, or properties, is a pair of extraordinarily sleek loft-style condos within a handsome Federal rowhouse near Logan Circle on an unusually inviting street. Each unit has two bedrooms, two spa baths, expensive appointments throughout, gas fireplaces, European washer/dryers, recessed lighting, private patios or roof deck, secure parking for one car and abundant natural light, including skylights. Together, these stunning units total 3,510 square feet, and that includes 640 square feet of an unfinished partial basement. In an admittedly hotter neighborhood than that of the rowhouse above, these apartments are offered at reduced prices of $714,000 and $814,000. Per square foot, they average $435 per square foot, which many would think of as good value for the drama and the location.

Which property is most likely to hold its value? In which one, would you prefer to live? It's not only about money. It is, to flog a hobby horse, about lifestyle.

Some of the other properties listed by various brokers and seen in the past week:

• In Arlington's Maywood neighborhood, a modest three-bedroom, two-bath brick rambler true to its 1958 vintage. One of the most modest homes on its block, this little house has a slightly improved kitchen, small yard and opportunity for expansion only on its current footprint. But the price of $600,000 is appropriate.
  
• A modest two-bedroom, one-bath centrally air conditioned condo on the top floor of a conveniently located Dupont Circle building. Although boasting granite countertops, the small kitchen has outdated appliances and the so-called dining room is barely more than an extension of the entry hall. But the views are nice and open, and there is a washer/dryer in the 1,140-SF unit, which is overpriced at $549,000 with a $259 monthly fee.
  
• In a transitional neighborhood near Ledroit Park, a three-bedroom, two-bath home within sight of a Department of Public Works storage yard. This brick rowhouse has a small, somewhat renovated kitchen, decent baths, good closets, carpeting on the second floor, nice old floors and a pleasant, if dark, finished basement. Reduced from $529,000 when it was listed in February, the property is now offered at $499,999, plus $10,000 in closing help. Taking into account only the space and quality, it's a good price.
  
• A well renovated three-bedroom, two-and-a-half bath bungalow on a very busy Chevy Chase, Md., street. The house in Norwood Heights has an appealing front porch for folks who like to watch the traffic, a kitchen with granite counters and decent cabinets, and a lower level that would embarrass no one who appreciates the in-laws. There even is a detached garage along with off-street parking for at least four cars. But the price, reduced from its original $750 in January to $725,000, is still too high by $25,000.
  
• In Crestwood, a four-bedroom, two-and-half bath 1923 semi-detached Wardman rowhouse that now is being marketed as "reduced - what a deal!" So why has this gracious old home been sitting on the market for a 272 days? The house is a strange mix of quality updates (renovated kitchen with top-quality appliances, granite counters, maple cabinets) and poor attention to detail such as that old chipped radiator in the kitchen; rooms that technically are bedrooms but now are walk-in closets; and two of the ugliest updated baths anywhere. Walking in, the great bones create an eagerness to see more. Two steps later, the funny colors, marred paint and the mismatched parts that aren't updated are a turnoff. And then there would be the mounting dollar signs to fix it up on top of the $795,000 price tag.
  
• A truly exceptional five-bedroom, four-and-a-half-bath, three-level detached house near the Lybrook neighborhood of Bethesda. With a stone front, beautiful stained-wood garage doors, Brazilian cherry floors, peerless center island kitchen, family room with surround-sound speakers, master suite with a luxurious master bath and his and hers walk-in closets that have copious built-ins, and q media room, this brand-new house in a verdant suburb has had no detail overlooked. At $1.925 million, it's a bargain.
  
• In the Palisades Park subdivision of Arlington, a lovely three-bedroom, three-and-a-half-bath townhouse close to Key Bridge with built-ins, walk-in closets, hardwood floors on the main floor and hallways, jumbo whirlpool tub, big kitchen with unfortunate laminate countertops, and a $73 monthly fee. Even with all this, the price of $895,000, from $910,000, is way too much – which explains why it has been on the market for more than two months.
  
• A chic, modern renovation behind an authentic 1890s façade of a three-bedroom, two-and-a-half bath semi-detached rowhouse north of Logan Circle that now has been turned into two very small, separate units - essentially two pocket condos. The upstairs unit boasts a living room so tiny it's not clear where to put the sofa, although there is a beautiful fireplace with granite surround and a kitchen lacking an obvious place to eat, plus powder room on the main level. The second floor includes two little bedrooms (would a Queen-size bed fit?) and a hall bath with a view of the neighbor's gutters and downspouts. The lower level unit is a one-bedroom, one-bath English basement and is even tinier. What's not tiny is the $749,000 price.
  
• In the far reaches of Capitol Hill north of Lincoln Park, a three-bedroom, two-bath attached rowhouse that has been untouched for years, except for a new roof and central air conditioning. It is being sold with a home warranty – no doubt for a good reason. However, unwarranted, by a gaping margin, is the asking price of $595,000.
  
• A three-level penthouse condo in Chevy Chase, D.C. with two bedrooms, a den, two and a half baths, a fireplace, nine-foot ceilings and 1,740 square feet of living space, much of it wasted by staircases. Other highlights of the apartment include a stylish open kitchen, two balconies, views of Virginia, plenty of closets, very nice baths, a garage parking space and hardwood floors, but no one has been willing to pay the asking price of $1.25 million with a $645 monthly fee that omits utilities.
  
• In Arlington's popular Lyon Park, a new bungalow more or less in the Craftsman style with five bedrooms and three and a half baths within its 4,355 finished square feet, plus a 380-SF attached garage. The glamour kitchen and family room are capacious, and the master suite's oversized bath and walk-in closet are bigger together than the good-size bedroom itself. There are many thoughtful touches in this three-level home, which occupies much of the lot, including solid six-panel doors, glass doorknobs, golden oak floors, kitchenettes on both the upper and lower levels, baths with tumbled stone flooring, and two zones for heating and cooling. The price of $1.475 million ought to be attainable for the developer.
  
• A Logan Circle 1977 two-unit rowhouse on a busy two-way street. Hollow-core doors speak to the quality, but the three-bedroom, three-and-a-half-bath house does offer some upgrades such as granite countertops, bamboo floors and a certificate of occupancy for the dim rental unit, currently producing $1,650 monthly. There is a parking space, too. Reduced to $875,000, the asking price remains overly aggressive after two months on the market.
  
• In Kalorama, an appealing two-bedroom, two-bath apartment with two-story living area in a 1925 pet-friendly building that was renovated almost 10 years ago. Its chief liability is the three-flight climb to the condo's front door. The apartment offers 970 square feet, an okay open kitchen, skylight, bright exposures through floor-to-ceiling windows, and two-car tandem (one behind the other) parking. If you like ruby-colored walls, you'll love the second bedroom. If the price of $620,000 is obtained, the contract will represent one more instance of drama overtaking practicality.
  
• A semi-detached rowhouse on a large corner lot that is located only by a stretch of imagination on Capitol Hill, as advertised, way past Lincoln Park and much closer to Benning Road. This 1923 dwelling has four bedrooms, two baths, a cement patio below a deck, and no hope of selling after a month and a half on the market at its laughable offering price of $699,900.