Washington-area baby boomers are competing with younger millennials for properties in neighborhoods within walking distance of Metro stations, restaurants, groceries and health clubs.
"As echo boomers [millennials] age and marry and have children, properties that have walkability coupled with a strong school system will command a premium," said Ryan Price, a research associate at the Center for Regional Analysis at George Mason University. "There is definitely competition between downsizing baby boomers and older echo boomers, but the young echo boomer families ultimately will have a smaller pool of properties to choose from."
That is because the areas in the center of the action will cost the most, according to Pat Kline of Avery-Hess Realtors in Northern Virginia. Highly walkable properties may also be smaller and therefore a tighter fit for growing families than homes found just outside the "perfect" pedestrian-focused area.
Median home prices in the Washington metro area increased 10.5 percent in 2012 overall; 8.3 percent for townhomes and 10.4 percent for condominiums in response to a lack of inventory and increasing demand, according to December statistics from Real Estate Business Intelligence.
"Young families are interesting," Kline said. "Some are going to the suburbs, but inside or just outside the Beltway if they can afford it. Others are totally interested in urban life, and they compete with the other groups."
Kline said boomers who are tired of spending years in the car want a change of lifestyle. Proximity to Metro is important, as they want to enjoy living in the District. They want to go out to restaurants, window shop and be close to things like the gym, dry cleaners and grocery story.
In Northern Virginia, the most walkable and sought-after areas are Ballston, Virginia Square, Shirlington and Old Town Alexandria.
The shift in lifestyles among both boomers and the millennials exacerbates the inventory problem, according to Bonnie Casper, president of the Greater Capital Area Association of Realtors.
"The change in demand and in desirable lifestyles feeds the lack of inventory," she said. "Everybody wants to purchase the same product."
Because demand is not as great for single-family suburban homes outside the Beltway, older boomers may not realize the profits they thought they would when they sell, she said.
"I had clients looking at D.C. condos along the Blue Line. They wanted a two-bedroom in the $550,000 range, Casper said. "For that price, they may or may not get a washer-dryer. They might not get parking. They might not get a second bath. You still have the condo fee. There's a reality check: 'Is that the lifestyle change I want to make, or should I stay in my house?' "
Other areas that have great walkability include downtown Bethesda, Logan Circle, Dupont Circle and Rockville Town Center.
Casper said a recent series of roundtable discussions centered around "Science City," a development planned along Route 28 that is slated to bring in 60,000 new jobs and housing. A development group representing the Johns Hopkins University biotech community made a presentation, Casper said, that showed a picture of Dupont Circle as what they wanted the area to look like after the expansion.
"Montgomery County will look drastically different in the next 10 years," Casper said. "Society is changing its habits, and mass transit is the No. 1 issue."
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