District of Columbia

Remember a couple of years ago - just before the market headed south? There was a piece in the Washington Post about the tidal wave of new condos that were being built - I think the number was something like 40,000 units that were planned or being converted into condos from rentals. It was like every developer on the East Coast independently said at the same time - "I have a great idea! I will build condos in the DC area." Naturally with that much supply on the planning boards, the market reacted in an absolutely predictable way that a student of introductory economics could have predicted. Prices fell as demand dropped, and some of the planned condo conversions and construction stalled. Some condo conversions never took place and other condo projects became rentals. Since the beginning of the stall, I have told clients that the pendulum always swings back the other way, and eventually there will be a condo shortage, because all those developers independently will say "Enough. No more condos for me!"

New condo prices in the Washington area were down almost 4 percent in the second quarter from a year ago, with sales volume exceeding 600 units for the first time since fall 2007, according to a report from Delta Associates. Prices for new and converted condos fell the most in suburban Maryland, down 7.6 percent. The drops in Northern Virginia and D.C. were lower, at 2.9 and 2.6 percent.

Delta CEO Greg Leisch predicted that the dwindling pipeline of condos - now at its lowest in five years - will likely result in a shortage by 2010, causing effective prices to rise. Prices tend to rise when there inventory-to-sales ratio is at three years or less. It is currently at 1.7 years in Arlington and Alexandria and 2.8 years in D.C. For the region, it is 5.1 years.

Because the number of projects set to deliver inside the Beltway will drop to near zero, Leisch said prices will rise sharply between 2010 and 2011. This is good news for projects like the Lionsgate, which is among the last high-end condominium projects to deliver in Bethesda.

"There are really very few upscale condo projects standing, and clearly none are going to start any time soon," said Marc Dubick, president of Duball LLC, which developed Lionsgate. "So when you look at ours with 30 units left to sell, that's only about a nine- to 18-month supply at most. Then there is Park Potomac with 40 left and the Adaggio with 30 left. That is only 100 units in Montgomery County. Upscale buyers are going to be hard pressed to find high-end units in the area," he said.

It is likely that the planned condo developments which were converted to rental units rather than come on the market as condos will convert back to condominium projects to meet the coming shortage before new projects are planned. Lender financing just isn't there right now for new condo projects. As many as 10,000 units were converted to apartments when the market went south, so they will be the ones to convert back to meet the first wave of demand in the near future.

What is the obvious conclusion? Anyone contemplating buying a new condo should start looking asap, because if Delta is right, prices won't go much lower than they are right now. I have seen a lot of great condos, from Alexandria to Germantown, the first time home buyer tax credit is still there, and interest rates are still low. Don't let this window of opportunity close on you

© 2009 Patricia Kennedy. Unless otherwise noted, the content, both written and in pictures, is the property of Patricia Kennedy . If you would like to use this image, please email me (housepat@mac.com) with your request. I'll almost certianly say yes, and ask only that you provide a link back to my original content as well as an acknowledgment. The same thing applies to any other material you see posted here on Active Rain or on any of my other blogs.

http://www.washingtoncitypaper.com/blogs/housingcomplex/2009/06/30/huge-929-unit-development-proposed-for-ft-totten/

"So finally, some uplifting news out of the Ft. Totten area: The Morris & Gwendolyn Cafritz Foundation has conceived of a colossal development project for the neighborhood, complete with a Children’s Museum, 929 residential units (431 of which will be designated mixed-income, and 98 of which will be Senior/Affordable). The project, shown below, sits directly east of the metro stop, and Ft. Totten Station, Clark Realty’s 300 market-rate units. (Plenty more pictures below, and check back for more news later today.)..."

Here is the breakdown as of June 29th, 2009

Washington DC continues to see the number of properties Pending; as the highest numbers since 2007; while inventory levels remain fairly steady.

Prince Georges County continues to show the most significant improvement. The number of properties under contract are at the highest levels in over 3 years; while the number of properties on the market has dropped 2000 homes; the same level as last as June of 2007.

Here are the number of homes on the market including the number of homes that were taken Off (EXPIRED) the market last week.




Washington DC

Single Family: Actives: 1864 (Down 25 from last week) Expired: 16 Under Contract: 709 (Down 14)

Condos: Actives: 1411 (Up 6 from last week) Expired: 7 Under Contract: 572 (Same)



Arlington County

Single Family: Actives: 469 (Down 1 from last week) Expired: 0 Under Contract: 239 (Down 12)

Condos: Actives: 504 (Down 8 from last week) Expired: 2 Under Contract: 230 (Up 5)



Prince Georges County

Single Family: Actives: 5551 (Up 5 from last week) Expired: 48 Under Contract: 1832 (Up 49)

Condos: Actives: 813 (Down 6 from last week) Expired: 11 Under Contract: 135 (Down 2)



Montgomery County

Single Family: Actives: 3468 (Down 31 from last week) Expired: 18 Under Contract: 2203 (Up 36)

Condos: Actives: 1259 (Up 11 from last week) Expired: 5 Under Contract: 445 (Down 18)



It is important to see the number of homes taken "Off" the market. While many of these homes will return to the marketplace a week or two; seeing a listing "expire" means that the seller and agent thought or expected the home to be sold by now.

http://www.washingtoncitypaper.com/blogs/housingcomplex/2009/06/29/dc-condo-prices-down-26-percent-in-the-last-year/