Patrick Rainey
5/2/2019
FI 331
Grosvenor Park
In 1988 Dick Dubin set out to develop 189 single family homes in the Bethesda
community of 80,000 people. He believed that this would be the perfect place for many young
professionals would buy a home in Grosvenor Park as a “bridge home” priced between the
apartments he owned two blocks away and their dream homes which usually went for $400,000
in the area. The 25-acre property that he was looking at was zoned for 426 garden apartments but
because of the wet lands at the bottom of the hill this number could only be reached if they built
parking underground which was an expensive proposition. So Dubin believed by building 189
single family homes, the density would go down, but the unit value would be increased. He ran
into a problem though with the Montgomery County Planning Department. They had a long list
of requirements and were demanding Dubin to pay $2.6 million in developer contributions
toward schools, sews, and mitigation of sound pollution. On top of that they also asked that 15%
of the project (28 units) be included at affordable rates to median income families. This threw a
wrench in his original plan to price slightly below market price to ensure a quick sellout. But
now after the expense of PD demands he had to decide on if he would stick to the original plan
or increase the price of the market rate units to fully cover the additional expenses brought on by
the PD.
Dick Dubin’s pricing was appropriate for selling the units. This is based off his study that
many of the households grossed about $100,000 in pre-tax income a year. So, with pricing the
units at $250,000 the average resident of Bethesda would be able to afford the homes. Another
stat that help back up his pricing was that the second greatest number of units sold were in the
price range of $250,000-$299,000 with the greatest number being $200,000-$249,000. With a
difference of only $1,000 between the trends he could capture a part of the market that is in the
Patrick Rainey
5/2/2019
FI 331
upper range of $249,0000. The trend in the area saw the population growing significantly in the
past 17 years and would continue to grow into the 2000s. With most of the population buying
single family homes and the county experiencing monthly sales of 1,200 units as well as the
increase in home values in the county I believe that his pricing and the number of units he plans
to sell is an appropriate number. If Dubin increases the prices of the market units, the bank may
view this as a risk and could ask a higher interest rate or ask to restructure the loan which could
result in a loss of profits.
I believe that the location is prime for single family homes. Like mentioned in the
previous paragraph the population in Bethesda is continuously growing due to the expansion of