Is Development Killing Reston Home Prices?

RESTON, VA -- It appears nothing can stop the breakneck pace of development in Reston, especially now that the county is considering raising the density limit in the area to pave the way for even more high-rises and housing developments. But a new report raises questions about whether Reston homeowners could see their finances take a hit as a result.

In a recent post on RestonNow, Eve Thompson of Reston Real Estate provided a breakdown of home sales in the Reston area since 2002.

"Overall more than 1200 properties traded hands accounting for more than $572M in volume," she wrote. "These numbers sound great but they represent a third straight year of declines in average home prices."

Average housing prices surged from a low of $381,000 in 2008 after the crash to $473,000 in 2015, a 24.1 percent increase. But in 2017, the average price of a home in Reston was $456,000, a decline of 3.6 percent over the last two years.

The price decline comes at a time when total units continue to increase, rising from 1,139 to 1,268 between 2015 and 2017. And with Fairfax County proposing to raise the density limit in the Reston Planned Residential Community (PRC) District, we are likely to see that figure continue to rise.

Correlation does not equal causation, so there is certainly reason to question whether the price decline is caused by a glut of development in the area, or other factors. After all, there are some signs nationwide that the house market is slowing down at least somewhat nationwide. Groundbreakings on new homes in the United States fell 8.2 percent in December, according to an Associated Press report.

However, the report also noted that the housing market in 2017 was the strongest in a decade.

A big factor in the housing market is the job market, which continues to strengthen. The unemployment rate is currently at 4.1 percent nationwide, and in Reston it's even lower at around 3.2 percent.

Because of Reston's strong fundamentals, it's certainly possible we're witnessing a blip in the housing market and the numbers will stabilize next year. But these new numbers provide a reason to believe that Reston home prices may have hit their peak, and are on their way down. Time will tell if continued development in the Reston area will further depress home prices.

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