New Condo Supply Remains At Lowest Level in a Decade

• October 8, 2013
• 4 Comments

by UrbanTurf Staff

Courtesy of Delta Associates. Click to enlarge.

The supply of new condos either actively marketing or for sale in the DC region is currently at its lowest level in a decade, according to a new report. Perhaps consequently, the sales volume for new product in the third quarter fell to a two-year low.

The report, from real estate research firm Delta Associates, posits that the drop in sales volume could either be due to buyer reluctance as a result of higher mortgage rates and the effects of sequestration, or rather just that the supply of new inventory is so low that it is curtailing sales activity.

Following are a few of the key findings from the report:

• In the DC region, there are currently 2,223 new condo units under construction or being marketed, down from 2,849 in the first quarter of the year. What that translates to is just 9.6 months of new condo inventory, based on the current sales pace. To give this number some historical perspective, last July inventory stood at 3,629 units. In 2007, there were nearly 20,000 new condos on the market.

• Inventory varies depending on the sub-market. For example, in most sections of DC proper and portions of Fairfax, Falls Church and Prince George’s County, there is less than six months of inventory (and far less in certain neighborhoods). However, in Arlington/Alexandra, there is close to 1.4 years of supply.

• There were 413 sales in the DC area in the third quarter, down 23 percent from the third quarter of 2012 and the lowest quarterly total since the fourth quarter of 2011.

• New condo prices in DC have risen 10 percent in the past year. In suburban Maryland, prices have risen 2.9 percent and in Northern Virginia, 2.5 percent.

• 1,944 units are schedule to start construction or switch to condos this year. Delta Associates has identified 15 Class A 80-150-unit apartment projects that are under construction (a total of 1,703 units) that could convert to condos.

The rendering of the condo project pictured in the thumbnail image is 2337 Champlain Street.

This article originally published at http://dc.urbanturf.com/articles/blog/new_condo_supply_remains_at_lowest_level_in_a_decade/7657

4 Comments

1. Larry said at 7:23 pm on Tuesday October 8, 2013:
   And still there is no incentive to build condos instead of apartments.

1. Justin S said at 8:49 pm on Tuesday October 8, 2013:
   With rental returns being so high, it just doesn't make a lot of sense to sell condos. I suspect that these numbers will prove to be the new norm over the next decade.

1. Joe said at 11:34 pm on Tuesday October 8, 2013:
   Plenty of incentive to build but the road blocks have gotten that much bigger: -FHA, FNMA and VA make it virtually impossible to sell new construction buildings with crazy/onerous regulations. If you can't sell, you can't build. -If you can't get your buyers financing from the oligopoly above you need to go to private lenders which used to do this type of thing but now can't because of Frank/Dodd regulations. If you can't sell, you can't build. There are plenty of other factors but the 2 above are so over arching that the rest are just window dressing.

1. Patrick said at 4:45 am on Sunday October 13, 2013:
   If FHA, FNMA did not exist, we would have NO mortgage market. Wait, we don't have a mortgage market!! They ARE the market. The problem is market driven, NOT regulation driven!! No person in their right mind would lend at the artificially low, manipulated interest rates driven by the Fed printing money. Once the Fed allows markets to function again, mortgages go to 6% + and the government can wind down.