Photo from iStock.com/vkyryl
In the United States, a condo is traditionally an affordable entry into homeownership for single young professionals. But, in Alexandria, VA, a condo purchase appeals to many groups of buyers, not only the stereotype, because the cost of living is expensive and housing prices in Northern Virginia are at an all-time high.
Condos also serve empty nesters, geo-bachelors, and singles well. The home could later be converted into an investment property, earning money for the owner as part of their retirement plans or another home purchase.
Buying a Condo for a Primary Residence in Alexandria
Alexandria condos are typically a hot commodity, especially if they have dedicated parking, because of the lifestyle’s simplicity. The potential for a walkable commute to work or Metro services, along with Alexandria’s lively restaurant and entertainment scene, continues attracting buyers of all ages and lifestyles.
Alexandria’s condo sellers’ market took a dip during the most restricted COVID-19 months, and the market supported unusually high inventory, but condo sellers have regained traction in the City of Alexandria and Fairfax County. Today's challenge for buyers echoes the rest of the country’s real estate frustration: low inventory and high prices.
Add in rising condo association costs, and buyers continue to wait on the sidelines for “bargains” or be pushed into purchases because of dramatic lifestyle events like a divorce. If the condo is priced competitively and at least has middle-ground updates, condo sellers should have no problem unloading their property, but buyers could face dramatic bidding wars.
City of Alexandria
- Median Price in Peak Month: May, $421,745
- Expected Average Year-over-Year Change (Dec. 2023 to Dec 2024): +3.1%
Fairfax County
- Median Price in Peak Month: Nov, $358,518
- Expected Year-over-Year Change (Dec. 2023 to Dec. 2024): +0.1%
Photo from iStock.com/in4mal
Buying a Condo in Alexandria As an Investment
A condo purchase often serves as a semi-temporary living solution with the possibility of a rental conversion in the future. As lucrative as this investment may be, you’ll need a thorough investigation into the terms and conditions for any condo building or community.
Some condo homeowners associations are more friendly to landlords than others. Prepare to work within the confines of the management group and the condo association’s rules and restrictions.
Barriers to watch for:
- Some lenders, like Fannie Mae and Freddie Mac, must approve the condo association and its practices for an initial purchase as a primary residence. They’ll investigate the business and finances via a condo questionnaire. If a condo doesn't meet federal guidelines, it is considered non-warrantable.
- If you intend to buy a condo solely to become a rental property, note that some lenders require the condo to be a primary residence first and for a certain length of time. They might also demand a large down payment of between 20% and 25% since condos do not appreciate as quickly as single-family homes because condo owners do not own the land.
- Condo associations often restrict the number of condos in the building permitted to become rentals, known as “rental caps.”
- A condo purchase also requires fees beyond taxes, insurance, and repairs. It’s common to pay condo association fees. These fees can amount to an additional $500-$1500 per month along with your mortgage, so it's important to consider that expense in your budget. As a rental property owner, you’ll also have to budget for vacancies (on average about one month per year) and potentially property management fees if you hire a professional company.
Before your purchase, you’ll also want to examine the statistics of surrounding neighborhoods to gauge potential interest in your condo for the future.
For instance, is the walkability factor high? Condo dwellers often look to simplify and want easy access to grocery stores and restaurants. Are there enough employers to lure the renters who can afford the rent you hope to charge? In Alexandria, the condo pool is large. Will yours stand out for any particular reason, such as a prime location next to a university or major corporation?
Buying a condo in Alexandria can be a sound investment if done correctly. Northern Virginia’s real estate market holds its value over the long term, and condo owners usually earn money from their investments.
For more insight about buying a condo in Alexandria, see The Alexandria Real Estate Outlook for 2024.
By Dawn M. Smith
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