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Don’t Expect New Condos in Downtown Silver Spring Anytime Soon

by Will Smith

Don't Expect New Condos in Downtown Silver Spring Anytime Soon: Figure 1
Downtown Silver Spring. Photo by faceless b.

Now that there are signs of life in the new condo market, prospective buyers are wondering what DC-area neighborhoods developers will pick for new projects. Unfortunately for those with their eye on Downtown Silver Spring, that area is probably low on the list.

Five condo projects delivered in Downtown Silver Spring during the condo boom from 2003 to 2006: The Aurora, The Crescent, The Silverton, 8045 Newell Street, and Mica Condominiums. All of those were new buildings save Mica, which was built as apartments in the 1970s then converted to condos in 2006.

The problem with the Downtown Silver Spring market now is that a large percentage of the recent condo sales are distressed properties, Mark Franceski, director of market research at real estate sales and marketing firm McWilliams|Ballard, told UrbanTurf. There have been 41 condo sales across those five buildings since the beginning of last year, and 19 of them were either foreclosures or short sales. As of last week, there were nine foreclosures and short sales on the market.

All that distressed activity has driven down average prices to around $275 per square foot. During the boom, the same condos were selling for $400 per square foot, which is the price range developers would look for now to justify starting a new project, according to Franceski. So prices would have to come up markedly before developers consider new projects in the area.

The silver lining for a would-be condo buyer in Downtown Silver Spring is that now could be a good time to buy, especially for those willing to endure the unpredictable process of buying a foreclosure or short sale. The inventory of distressed properties in the area could be absorbed in the next six to twelve months, after which presumably pricing will start to firm up and potentially increase.

For more UrbanTurf coverage of Downtown Silver Spring see:

This article originally published at http://dc.urbanturf.com/articles/blog/dont_expect_new_condos_in_downtown_silver_spring_anytime_soon/3177

8 Comments

  1. IA said at 8:28 pm on Wednesday March 16, 2011:
    I saw that they are building something called the Galaxy next to the Aurora condo building. I guess these are apartments? Great article. Didn't know only about 40 units sold there since last year.
  1. jag said at 10:16 pm on Wednesday March 16, 2011:
    Galaxy is one of 4(?) large apartment buildings currently under construction in DTSS. There's definitely a VERY limited number of condos for sale in 20910, probably because all the 2006 sales have people straddling the line between being underwater, but not enough to walk away.
  1. Dian said at 10:37 pm on Wednesday March 16, 2011:
    I thought the vacant lot that is next to the future DTSS Library was slated to become condos. Is that scraped?
  1. Mark @ MB said at 10:58 pm on Wednesday March 16, 2011:
    That may sound like not many, but those projects combine for almost 700 total units, so that's not a huge amount of turnover. There were 41 sales since 2010, but only 34 in 2010, which was about 5% turnover for those buildings. Anywhere from 5-10% is pretty normal, and will be in the lower end of that range for established projects like these.
  1. jag said at 1:56 am on Thursday March 17, 2011:
    Dian, the DTSS library under construction is adjacent to the Crescent Condo. The vacant lot behind the Crescent will remain so until the library is built and the Purple Line path is finalized. Across the street (Fenton) from the library site is a church and parking lot that has just received the community's blessing (if you consider East Silver Spring Civic Association a proper representation of "the community") to be redeveloped into a mixed use residential/retail development. That redevelopment will happen well before the vacant site next to the library/Crescent is developed.
  1. IA said at 3:45 pm on Thursday March 17, 2011:
    Jag, thanks for your input on this thread. I find it very valuable. In your opinion, is now a decent time to purchase one of these distressed properties? <275$/sf sounds like a bargain.
  1. jag said at 5:08 pm on Thursday March 17, 2011:
    IA, I think DTSS is definitely on the rise, but whether prices start rising sooner rather than later remains to be seen. There’s still a lot of construction going on around town and the macro economy doesn’t convince me that the housing prices will start upwards anytime soon, so I think there’s definitely no rush to grab a property. The amount of new construction (1000+ apt units) will likely keep prices tame for the near/mid term. So yeah, there’s very little chance the prices will go down further, but I also don’t expect them to rise dramatically in the next 0-18 months either, IMHO.
  1. R said at 3:44 pm on Tuesday June 25, 2013:
    The Aurora is also not a new building--it was built in the 40s and converted to condos in the mid-2000s.

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