Condo sales in the metro area more than doubled during the first quarter of 2008 hinting at the beginnings of a recovery in that sector of the real estate market.
Net new unit condo sales were up in the metro area to 516 units from 231 in the fourth quarter of 2007, a 123.4 percent increase, according to new data from real estate-tracking Delta Associates.
But, although the prospects for the condo market are improving, “the slowdown in the second half of 2007 is continuing into the first half of 2008,” said William Rich, vice president of consulting and director of condominium practice for Alexandria-based Delta Associates. Compared to the 719 net units sold in the third quarter — and the 1,400 to 1,500 sales during each quarter in the first half of 2007 — the market still has a long way to go.
On the positive side, in the immediate metro area and surrounding suburbs, average prices per square foot for same-store new condo sales were only down 1.2 percent in the first quarter compared with a year ago. Rich expects a turnaround for areas closest to the city to happen toward the end of this year and the beginning of 2009, but for areas further out, not until 2010 or 2011.
Rich has also seen more developers convert projected condos into apartments. The vacancy rate for all apartments was up slightly to 4.5 percent from 3.4 percent a year ago, but that is still low compared with the 5.6 percent national average.
The “shadow” market, or unreported rental market, has also absorbed potential renters, further denting apartment demand, said Grant Montgomery, Delta’s vice president and director of apartment practice.
The official and unofficial boost in the number units has acted helped keep rents down. Rents for Class A, or newer luxury apartments, increased by just 1.4 percent in the first quarter, just half of the 2.9 percent increase seen during the first quarter of 2007.
