Real Estate

Washington’s urban revival pushes into no-go areas


When Nora Sohnen moved into her then-fiancé’s one-bedroom house in Washington DC’s Shaw area eight years ago, the neighbourhood was only just emerging from a decades-long spiral into urban decay.

Families had fled after the 1968 civil rights riots, hollowing out the historically and culturally rich African-American neighbourhood. In the 1980s and 1990s, the area became associated with crack cocaine use. Crime took hold and businesses shuttered.

“There were not many sit-down restaurants nearby when we moved in,” says Sohnen, a 39-year-old who works in international development. “But pretty quickly, that changed.”

Just how quickly is astonishing: less than a decade on, Shaw, as well as other once-neglected and crime-ridden neighbourhoods in DC’s urban centre, is now a buzzing hub of bars, restaurants, co-working spaces and nightlife as young professionals try to get a foothold in the property market. “DC has been a market driven by urban revival rather than suburban growth,” says Aaron Terrazas, senior economist at Zillow, the online property database.

For example, Bloomingdale, a formerly rundown neighbourhood in the north-west quadrant is barely two miles from the US Capitol. As with Shaw, hyper-gentrification has transformed the business and residential landscape.

In November, median prices for homes there, including town houses and condominiums, reached $825,000, more than 70 per cent above their pre-crisis peak of $483,500, according to Zillow — house prices in some of the capital’s suburbs have yet to recover to pre-crisis levels.

Compass, the property group, is listing a three-bedroom apartment in Bloomingdale for $799,000. It also has a remodelled five-bedroom, three-bathroom row house built in 1912 for sale at $1.2m. In Shaw, Redfin is selling a three-bedroom apartment for $1.395m.

The rapid recent price increases in such areas contrast with the less dynamic picture of the overall DC metro area. Since May 2014, price growth in the DC metro area has been slower than the rest of the US market in part because of the more constrained wage growth.

Rick Hoffman, vice-president of the Georgetown branch of Coldwell Banker Residential Brokerage, says that part of the price growth in the city’s urban neighbourhoods is down to its growing appeal to “empty nesters” — baby boomers who bought large properties in the suburbs in the 1970s and 1980s and who now want to move closer to town.

“It is just not the lifestyle they want any more,” says Hoffman. “Many now want a more urban lifestyle with all the amenities within walking distance.”

Three-bedroom apartment in Bloomingdale for $799,000 © Anna Muhhina Photography

Sohnen says that another draw is free pre-kindergarten schooling, a cost that can add up to thousands of dollars a month elsewhere. Now married with two children, she bought a second property on the edge of Shaw last year with her husband — a three-bedroom terraced house with a small front garden which cost about $850,000.

She says she is committed to the neighbourhood but describes Shaw’s transformation in recent years as both “fascinating and often uncomfortable . . . we are very aware of the gentrifying and know that a lot of change can be difficult for those who have been here for decades”. She adds: “We have public housing next door to places where you can buy a $17 cocktail.”

Katherine Wellborn, a realtor at Compass, says that the revival of areas such as Shaw has brought with it stiff competition among buyers in many of the city’s neighbourhoods — a trend she expects to continue this year. “Things are pretty competitive in anything walkable, which is a lot of DC,” she says.

She also expects the impact of the recent announcement by Amazon, the online retailer, to locate its second US headquarters just across the Potomac in Crystal City, Virginia, to push prices up not only in and around Crystal City but also in neighbourhoods like Shaw too. “It will probably make more buyers bite the bullet rather than wait,” she says. Amazon plans to create 25,000 new jobs in the area.

The Rustik Tavern, Bloomingdale © Darren S Higgins/New York Times/Redux/eyevine

Celeste Scott bought a two-bedroom condominium in Bloomingdale for just under $500,000 in 2014, when the gentrification process was well under way. Just over four years later, that is starting to look like a good buy: a neighbour recently sold a near-identical unit in their 12-unit building for $565,000.

But Scott, who works at a management consulting firm serving the federal government, says she has no plans to sell. There are restaurants and bars on her street and, while crime is still part of life in Bloomingdale, she is happy to stay put. “People are staying in the city longer,” she says.

Buying guide

  • Buyers in Washington DC have to pay annual property tax equivalent to 0.85 per cent of a home’s assessed value
  • Shaw and it its neighbouring areas are a little over a mile from Union station and about 30 minutes’ metro ride from Crystal City, home of the new Amazon HQ2 site

What you can buy for . . .

$850,000 A two-bedroom apartment in Bloomingdale
$1.5m A remodelled townhouse in Shaw
$2.25m A five-bedroom house in Shaw with spacious interiors and parking

More homes at propertylistings.ft.com

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