For 16 years, Carol Heatherly has called a 1,200-square-foot, two-story house with faded white siding on East Fifth Street her home.
She grew up in the same neighborhood, in a brick house a few doors down. She moved away, then returned in 2000, when she and her husband bought the house at 109 E. Fifth St. for $78,500, according to online state assessment records.
Heatherly, 71, is retired. She collects Social Security benefits. Her husband, a disabled Vietnam veteran, also receives compensation through the U.S. Department of Veterans Affairs.
“We don’t have too much, but we get by,” she said in an interview this month.
Twenty, ten, even five years ago, the entire street was lined with homes of similar size, occupied by people of similar means. In contrast with the larger, more ornate houses on Church, Second and Third streets, those on Fourth and Fifth streets were “the working people’s homes,” as Heatherly described it.
But times are changing, and so is her neighborhood — partly the result of a new residential development between East Fourth and Fifth streets. The four-floor town houses, with new brick facades, tower over more modest early-20th century homes around them.
After a lengthy construction period — including significant delays when the former developer abandoned the project after the national housing market collapse — the 49-unit development known as Townes at Maxwell Square recently was completed.
In 2013, Comstock Homes, a Virginia-based developer, purchased the property from the previous developer, Churchill Group. Settlements on sales for the final homes were reached last month, according to Matthew Sitler, a sales manager for Comstock Homes.
Most houses sold for between $379,000 and $490,000, Sitler said in an interview in August.
Billed by Comstock as “modern luxury meets historic charm,” the three- and four-bedroom houses are designed to appeal to empty nesters and families “seeking the walkable, urban environment of downtown Frederick,” according to information on the company website.
Many in the community, including some who live in the surrounding neighborhood, praise the project for its multiple benefits — replacing a long vacant and abandoned lot with new development, meeting the increased demand for downtown housing, boosting surrounding property values.
But with those benefits lies the potential for unintended consequences — that new development could push longtime residents like Heatherly out of a traditionally more affordable downtown neighborhood.
A catalyst for revival
The Maxwell Square development offered everything Donna Reid and her husband wanted when they decided to downsize from their last home in Gaithersburg. The empty nesters in 2014 bought their house at 36 Maxwell Square for $426,055, according to online assessment records.
In nearly two years since they moved, “I’ve loved every minute of it,” Reid said.
The enclosed development design provides her and her husband peace of mind to leave their home unoccupied when traveling. The community, with young families, newlyweds and retired residents such as Reid, offers a various opportunities to connect, from book clubs to exercise groups.
Reid walks with her next-door neighbor every morning, she said.
From a planning perspective, projects such as Maxwell increase downtown density, which means more customers patronizing downtown businesses, more eyes monitoring the community and more development, Joe Adkins, the city’s deputy director of planning, wrote in an email this month.
“It’s really going to revitalize the whole area, bring up property values and bring more people into Frederick,” Sitler predicted.
At least two other developers have started projects in that same neighborhood.
Ron Hemby, owner of Hemby Custom Homes, said his interest in the area was the direct result of the Maxwell Square development, as well as the North Pointe homes, which are closer to Seventh Street.
“I saw things there were starting to come up,” he said in a phone interview earlier this month.
For a builder, it was a great opportunity. He bought each of the three properties on East Fifth Street in 2014 for a little less than $200,000, according to online assessment records. He built two-story, 2,000-square foot homes on each of the lots. The homes sold in 2015 for $410,000 to $440,000.
He plans to build and sell a similar-style home on a fourth lot on the same street. Hemby recently purchased the vacant site at 107 E. Fifth St. from Habitat of Humanity for Frederick County after the historic but dilapidated log cabin on the land was demolished.
McWhorter Construction, of Clarksburg, Maryland, has also started in on plans to build a duplex on Maxwell Avenue between Fourth and Fifth streets. The city Historic Preservation Commission in August gave the second of two approvals needed for a new building in the Frederick Town Historic District.
Data: Increasing property values, median income
Wayne Six, who owns Six & Associates Inc., a real estate appraisal company, affirmed Sitler’s prediction for rising property values. In his experience as a real estate appraiser, he’s seen the same situation unfold in many other areas of Frederick, and other cities such as Washington, D.C., and Baltimore, he said in an interview last month.
It often spurs owners of existing homes to rehabilitate and renovate their homes, too, he said.
Sales prices, an indicator of home values commonly used among real estate professionals, have already increased in the neighborhood in recent years, according to the Metropolitan Regional Information Systems, an online real estate information service for real estate professionals in D.C., Virginia and Maryland. Six provided The Frederick News-Post data from the MRIS database.
The average sale price of homes in the neighborhood between Fourth and Seventh and between Market and East streets rose from $183,488 in 2010 to $314,928 in 2014. Not all of the 71.6 percent increase can be attributed to Maxwell Square development. Other factors, such as overall economic growth and an increased demand for downtown housing, likely contributed, Six said.
But compared with the much smaller increase in average sale prices for the city of Frederick as a whole during that same period of time — from $215,202 in 2010 to $243,161 in 2014 — the change in the Maxwell neighborhood becomes more significant.
“It’s definitely safe to say those Maxwell homes had a pretty positive impact on [property values in] the neighborhood,” Six said.
Median income also increased more in that time frame in the Maxwell neighborhood than in the city of Frederick. Median income in census tract 7501, which encompasses the neighborhood from Fourth to Seventh and from Bentz to East Streets, increased 35 percent. Median income rose from $45,529 in 2010 to $61,488 in 2014, to according to data published by the U.S. Census Bureau.
Within the same time, median income in the city of Frederick as a whole dropped slightly. Median income decreased by a little less than 1 percent, from $66,570 in 2010 to $65,967 in 2014, according to Census Bureau data.
“Unbelievable” was how Erma Lee described the difference in her neighborhood compared to five years ago.
Lee, 91, moved to her house at 119 E. Fifth St. in 1970. She sees the change as positive.
“It was like shacks before,” she said in an interview this month. “I see it as a great improvement.”
Asked how she felt about the $400,000-plus price tags on the new homes, compared with her own house, she gasped in amazement.
“They cost that much?” she asked. “I had no idea.”
Her home was valued at $141,300 as of July 1, according to online assessment records.
Lee is supported through Social Security benefits and her children and grandchildren. She said she couldn’t imagine paying that much for a house, or anything.
In that disparity lies the problem, according to Heatherly.
On a late Friday afternoon in September, she stood on the front porch, gazing west toward the looming shadow of the new town houses.
“They don’t really fit in with us,” she said.
She hasn’t seen anyone forced to leave, but even the idea that rising income levels and increased property taxes could force her and others out of their longtime homes was wrong, she said.
Marilyn Ketterman was already thinking about moving. Ketterman, who lives next to Heatherly at 111 E. Fifth St., was worried about how rising property taxes might affect her ability to keep the home where she’s lived since 1990.
“I’m definitely considering selling,” she said. “Even if it doesn’t get to that point, I don’t want to wait around and find out.”
Cities across the country are facing similar discussions over the process through which redevelopment of deteriorating urban neighborhoods pushes out longterm, less affluent residents, a phenomenon known as gentrification. It’s a hotly debated topic, controversial in its very definition, as well as its implications for segregating neighborhoods.
Two sides of the coin
The negative implications for gentrification depend largely on the policies and market conditions of the neighborhood in question, according to Mary Bogle, a senior research associate with the Urban Institute’s Metropolitan Housing and Community Policy Center. The Urban Institute is a social and economic policy research center based in D.C.
In a neighborhood with room for new development, gentrification can be a good thing, Bogle said in a phone interview this month.
“It causes income-mixing,” she said. “It increases density, allows room for low- and high-income people to coexist ... avoids what I call the ‘Starbucks on every corner’ phenomenon.”
Government policies like housing vouchers, tax abatements for existing homeowners and other incentives to include affordable housing in development projects help ensure there’s room for everyone, Bogle said.
The city of Frederick in 2008 adopted an ordinance that requires developers building 25 or more homes in the city to set aside 12.5 percent of those dwellings as moderately priced homes. Alternatively, developers can pay a fee instead of building the moderately priced homes, equivalent to $16,100 for each affordable home that’s required but not included in the project.
Plans for Maxwell Square, however, were approved by the city Planning Commission in 2005, prior to the ordinance, according to Adkins. The developer did not have to meet the ordinance requirements.
Bogle could not speak to the Maxwell Square neighborhood specifically. Generally, when there aren’t government policies tied to new development, lower-income residents may be more likely to experience the consequences of gentrification.
Six said he expected continuing increases in property value and changing demographics in the neighborhood, indeed, would force some residents to move out. He didn’t see it as a bad thing, though.
“We see it happen all the time,” he said. “You just got to find other neighborhoods to go to. There are other places they can go.”
But just as income-diverse neighborhoods benefit everyone, stratified neighborhoods that result when low-income residents are pushed out harm everyone, Bogle said.
In other words, what could be a win-win situation becomes one in which all parties lose.
Heatherly isn’t interested in playing the game, win or lose.
“I’m going to leave sooner or later,” she said.