DC’s New Condo Shortage Keeps Prices High Through First Quarter

• April 9, 2015

by Lark Turner

Click to enlarge.

Low inventory in the DC-area market kept prices for new condos high through the first quarter of 2015, according to a recently-released report from real estate data firm Delta Associates.

The trends of low availability, limited supply and price growth continued from last year. But 2015 overall is slated to be an even hotter year than last for the market.

That’s thanks to three main factors, Delta says:

1. The return of larger condo buildings, with 100 or more units, like PN Hoffman’s 130-unit building planned for Parcel O at the Yards.
2. Increased job growth in the area this year, despite slower-than-expected economic growth in 2014.
3. An expected rise in interest rates which could drive potential buyers to purchase.

An interior rendering of a condo at The Oronoco in Alexandria.

“Same-store” prices for new condos — meaning year-over-year comparisons — rose 7.6 percent metrowide over the past year, but that was driven by Alexandria and Arlington, where prices were up about 17 percent. In DC proper, prices were up just 0.2 percent in the same period. Delta attributes that to a lack of “same-store” units for comparison — most DC condo projects are small and sell within a year.

Sales volume was strong in the first quarter of 2015. The Mideast DC sub-market showed particularly strong sales, rising 8 percent — the highest level since 2006-2007.

Inventory generally remains low in the District. Currently Upper NW has no new condo inventory. Central DC, which catches the highest prices per square foot of any submarket in the region, has about four months of inventory.

As for apartment-to-condo conversions conversions this year, Delta doesn’t expect many occurring during the development phase, at least not in the suburbs, but it notes that just over 1,000 units being built in DC right now could potentially go condo.

Sub-market definitions:

• Capitol East includes Capitol Hill, Capitol Riverfront, Hill East, NoMa, Southwest Waterfront, and everything east of the Anacostia River.

• Mideast DC includes Shaw, U Street, Adams Morgan, Columbia Heights, Petworth, Bloomgindale, Takoma, and Brookland.

• Upper NW DC includes the neighborhoods west of Rock Creek Park, including Georgetown, Glover Park, Woodley Park, Tenleytown.

• Central DC includes West End, Dupont Circle, Logan Circle, East End, Mt. Vernon Square/Triangle.

This article originally published at http://dc.urbanturf.com/articles/blog/dcs_condo_shortage_keeps_prices_high_through_first_quarter/9744