DC’s New Condo Supply Will Take 3 Years to Balance Out

by Shilpi Paul

image
A rendering of The Montrose, a new condo project for Georgetown. Courtesy of Capital Pixel.

In light of recent news regarding the massive imbalance in construction of new apartment units to condo units, UrbanTurf is re-publishing an article from July that speaks to how long it will take for new condo construction to catch up with demand.

The new condo supply in the DC area is currently at its lowest level in ten years. However, the imbalance is slowly turning around.

According to William Rich, a senior vice president at Delta Associates, the high number of condo construction starts planned for the remainder of this year will increase supply notably over the next 36 months. About 2,300 units are scheduled to start construction this year in the metro area, which is the highest number of starts since 2006.

“The anticipated increase in construction starts in 2013 will make a dent in the undersupply of condos in the market, especially in the District,” noted Rich. “Over the next three years, we expect for supply and demand to be in balance in the District, while in suburban jurisdictions we expect there will still be an undersupply.”

About 50 percent of the new units are planned for the District, 40 percent in Northern Virginia and the remaining 10 percent in Maryland. Major projects that could begin construction this year in DC include the Hine School redevelopment, with118 units, and Parcel 4 at The Wharf, with 134.

Here is an infographic that gives a good sense of the current inventory-to-sales ratio for new condo projects in the region:

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Courtesy of Delta Associates. Click to enlarge.

This article originally published at http://dc.urbanturf.com/articles/blog/increase_in_dcs_condo_supply_should_bring_supply_and_demand_into_balance_in/7322

3 Comments

  1. jonny said at 10:53 am on Thursday September 19, 2013:

    Hi,
    I live in a large 2BR apt in historic (pre-war) coop building in a great area (16th and S)—an area that keeps on getting better.

    I plan to move away from DC within the next 2 years. But I’m not entirely sure when (depends on job relocation). My coop has appreciated quite handsomely in recent years (based on comps) and I could probably sell it for around $500K now. But I’m concerned that the coming glut of many brand new condos will impair the value of my place—the classic case of supply and demand.

    Do the experts think I should consider putting my place on the market now, to lock in the gains? Or do we think prices will at least remain stable over the next year or two, even for older units that have lots of character (and classic proportions, not the smaller sizes of new units)—but lack some of the amenities of newer buildings (no gym, no deck, no w/d in unit, etc)?

    Thanks!!

  1. swester said at 1:15 pm on Thursday September 19, 2013:

    @jonny

    I’m in a similar position, and I’m listing my unit shortly - while it is still the newest construction in my area. Between the explosion of supply and the rising interest rates likely in the next 2-3 years, I doubt we’ll continue to see the sort of appreciation we’ve seen in the past 3-4 years on condo units.

  1. torresrealtor said at 5:14 pm on Monday September 23, 2013:

    @jonny

    As @swester correctly notes, now is the safest time to sell. Inventory levels are at historical lows, and it is currently a strong seller’s market. Well-priced properties throughout the Washington area are enjoying multiple bids, and list to sales-price-ratio are near all-time highs. Supply forecasts lead us to believe that the market will tilt back towards a more balanced market, although the exact timing is impossible to predict. Rising interest rates will certainly curb buyer demand, further accelerating this process. If you are in a position to sell, I would recommend you do so now. If you have any follow up questions, feel free to email me at .(JavaScript must be enabled to view this email address).

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