Market Street Condominiums and The Savoy

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These similar, four-level condominium buildings are both located on Market Street, east of West Market and closer to the heart of the Reston Town Center.

SIGNIFICANT UPDATE ON THE SAVOY, Draconian December, 2012 changes are having a negative impact on resales in this prime location four years later: For some time, there has been internal concern over the percentage of units in The Savoy which which are being rented, versus owner-occupied. Observers of the general real estate news services were constantly asking me about the oft-read “analysis” from around the country that high percentages of renters in a community are a deterrent to value. Allow me a few words on this subject, and I will speak in general terms. For a more detailed discussion, contact me:

One overriding important issue for condominiums is to keep the percentage of renters in a building below 50%. This is the trigger point for financing from most major lending institutions; in other words, anything over this percentage would trigger a situation in which new buyers are unlikely to get financing.

In an ideal world, every condominium building would have 100% owner-occupied units, and the entire world would view your building as the pristine oasis in your community. We do not live in an ideal world.

The Savoy announced a new policy in late 2012 ┬áthat any new buyer in the Savoy could not rent his/her unit until the overall rental percentage went under 35%. Market Street Condominiums’ condo board followed suit with a similar proposal. Furthermore, rentals after that would be determined by a “waiting list”. Evidently, there is the belief that driving the rental limit down to 35% will make The Savoy somehow a “classier” building. I will spare you my take on that.

Let’s be clear about the likely result of this draconian change. This change has eliminated a valuable source of buying and price support for The Savoy, namely, the investor market. When the market was in decline and many owners scrambling for buyers, it was the investor market which saved The Savoy from total price collapse, and saved the condo association from hemorrhaging money by bringing in people who would pay the monthly condo dues. The prime location and limited rental supply made investing in these units a sound play in a depressed real estate asset class. Investors have helped form a necessary price bottom, and have been instrumental in driving prices back up to the benefit of existing condo owners.

Even if you are buyer to be a resident, not an investor, you must take into consideration that your ability to rent your unit in the future has been curtailed by the above actions. So despite the convenience of this location and the high quality of the buildings, purchases need to be made at a discount to other local offerings, simply to safeguard yourself for living in a condominium building which has de facto co-op qualities.

The condos range from one bed room to three bed rooms, many with soaring ceilings. The Savoy generally carries a slight premium to Market Street, given a general perception of slightly superior amenities.

These condominiums appeal to a wide range of potential homeowners: from first time buyers who seek the convenience of urban living; empty-nesters seeking to remain in Northern Virginia and enjoy urban amenities; businessmen working in the Town Center looking to live close to where they work; to a host of other reasons.

I have worked with both buyers and sellers in The Savoy and Market Street Condominiums for the last five years. I strongly urge you to call or email me for details about housing in these buildings. I have developed detailed pricing and analysis covering the last four years which is beyond what you will get from standard sources.

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