Sales of new condos in the Washington region plummeted to a new low during the past 12 months as development slowed and new units began competing with cheaper resales, a new report says. But experts say a new wave of developments already in the offing will kick-start the market, according to the Delta Associates Mid-Year Washington/Baltimore Condominium Market Report.
During the 12-month period ending in June, new-condo sales in the region fell by 43 percent to 1,487 total, according to the report. The pace was slower than any corresponding period during the recession.
“With limited new offerings on the market there is a growing shortage of fresh product at good locations to appeal to buyers,” the report said. “Some of the reduction in sales volume is due to a lack of sales-worthy units.”
| New condo sales hit new low | ||||||
| 12 months ending June: | ||||||
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
| Washington | 2,137 | 1,363 | 266 | 442 | 743 | 346 |
| Northern Va. | 6,290 | 2,031 | 647 | 799 | 1,524 | 907 |
| Suburban Md. | 2,322 | 1,373 | 930 | 378 | 356 | 234 |
| TOTAL | 10,749 | 4,767 | 1,843 | 1,619 | 2,623 | 1,487 |
| Source: Delta Associates | ||||||
In some cases — most notably Arlington — new units were competing in price with “certified pre-owned” condos developed during the boom years and selling at a discount. The phenomenon has also lowered the price of condos during the past year, although that has varied by jurisdiction.
New-condo prices were down 2.4 percent across the region during the past year, but prices in downtown D.C. increased “due to a lack of any kind of competition,” the report said.
Meanwhile, resale prices have declined regionwide by 7.3 percent since May 2010. Arlington and Alexandria saw slight increases in price while foreclosure-ridden Prince George’s and Prince William counties saw steep declines, according to the data.
Experts said the market over the past year has suffered from a dearth in supply, largely because of the difficulties of getting financing for condo projects that aren’t seen by banks as viable.
“If you’re a new-condo builder and prices continue to drop on resales, how do you compete with your product in that territory?” said Jon Wolford, a Northern Virginia real estate manager.
And with lenders requiring a bigger percentage of presold units than before, it’s tougher for new condo developments to even get financing, said Jonathan Miller, president and CEO of real estate consulting firm Miller Samuel.
But new development will be rejuvenated in the coming years by transit-oriented development near Metro stations, the report said.
Tysons Corner and Reston — the homes of future Silver Line stations — will see sales “accelerate over the next decade” while end-of-the line stations in Prince George’s county targeted for redevelopment also have the potential to spur large-scale growth in condos and apartments.
