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Condo Sales at Lowest Level Since 2008, But Could Be Worse
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Written by Muriel J. Gibson   
Tuesday, 20 December 2011
Condominium sales activity in the Washington metropolitan area has dropped to its lowest level since 2008, but there is a big difference in market conditions today compared with those at the start of the housing meltdown.

There are 2,950 new units being marketed or under construction, compared with 8,833 units in the third quarter 2008. As a result, there is a two-year inventory of units today, compared with an inventory of 7.4 years then. Also, three years ago, 58 percent of all condo projects being marketing were experiencing price declines, compared with 42 percent today.

Despite record low interest rates, there were just 356 net sales during the third quarter in the area. During the 12-month period ending September, there were a total of 1,475 sales, similar to the low point in the market during the 12-month period ending September 2008. While economic conditions are playing a role in the reduced sales activity, only one-third of marketed units are considered "fresh," having been on the market for two years or less. Instead buyers are turning to resales.

Condo prices declined by more than 5 percent in Loudoun/Prince William and Arlington/Alexandria because of re-pricing at a few projects that have had units on the market for several years. However, prices were up in central D.C. by 1.6 percent. Concession rates are low in the District, as many projects finally reach sell out. Montgomery County saw a drop in concessions from a year ago, as did Loudoun and Prince William counties and Fairfax/Falls Church.

The number of unsold units in projects currently being marketing dropped to 2,950 at the third quarter, the first time the segment has dropped below 3,000 units since June 2003. In addition, there are 3,378 units that plan to start sales within the next 36 months and around 12,300 units in the longer-term condo pipeline and 61,300 multifamily units that can be built either as condos or apartments.

It is a different story for townhouse-style or four-story, two-floor-over-two-floor condos, which are being built in the outer suburbs. While nearly 800 condo units have started construction so far in 2011, another 800 to 1,000 units are planned to start by the end of the year. If timetables hold, the marketing and/or under construction pipeline will be on the rise soon for the first time since 2006. The introduction of new units should be the beginning of the price traction spiral of the next cycle - beginning perhaps in late 2012 or 2013. With it should come an increase in sales volume and more desirable units entering the condo market.
Last Updated ( Tuesday, 20 December 2011 )