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Condo Report A C O M P R E H E N S I V E A N A LY S I S O F T H E R E S I D E N T I A L R E A L E S TAT E M A R K E T I N T H E W A S H I N G T O N M E T R O P O L I T A N A R E A . S E C O N D Q U A R T E R , 2 0 1 7.


Sale of New Condo Units Q2 2017

Capitol Hill / Riverfront / SW

1825 19th Sreet NW, # PH Dupont | $1,695,000

Upper Northwest Upper Georgia Ave.

UNITS SOLD

44

AVG SOLD PRICE

$832,279

AVG PRICE PER SQ. FT.

$817

UNITS SOLD AVG SOLD PRICE

-1 $4,160,000

AVG PRICE PER SQ. FT.

$1,300

UNITS SOLD

7

AVG SOLD PRICE

$390,340

AVG PRICE PER SQ. FT.

Columbia Heights/ Shaw

AVG PRICE PER SQ. FT.

Central

AVG SOLD PRICE

$580

UNITS SOLD

16

AVG SOLD PRICE

$606,435 $751

UNITS SOLD

39 $1,358,487

AVG PRICE PER SQ. FT.

Noma / H Street

$1,061

UNITS SOLD

22

AVG SOLD PRICE

$673,625

AVG PRICE PER SQ. FT.

River East

$709

UNITS SOLD

2

AVG SOLD PRICE

$295,738

AVG PRICE PER SQ. FT.

$259

1806 9th Street, Unit 1 Shaw | $1,395,000

Q2 2017 UNITS SOLD

Arlington Alexandria

3

AVG SOLD PRICE

$810,069

AVG PRICE PER SQ. FT.

$603

UNITS SOLD

15

AVG SOLD PRICE

$599,990

AVG PRICE PER SQ. FT.

Bethesda

$281

UNITS SOLD AVG SOLD PRICE

1 $1,457,050

AVG PRICE PER SQ. FT.

Source: MRIS, Delta associates 4/1/2017-7/1/2017.

772 Girard Street Nw, Unit 5E Shaw | $839,000

Data deemed reliable, but not guaranteed.

$897


Regional Condo Market Overview The Washington condo market remains steady as the continued introduction of new condo projects allowed for second quarter 2017 sales to keep pace with first quarter sales. The development pipeline contracted as a result of strong sales activity and the ongoing trend of apartment switchbacks. Meanwhile, sales prices have increased in most submarkets over the past year. A total of 131 new condominium contract sales occurred in the District during the second quarter of 2017 and 570 for the 12 months ending in June 2017—a decrease of 15.7% from the previous year. Capitol Hill/ Riverfront/ SW, Columbia Heights/ Shaw, and Central DC submarkets continue to lead the District in sales activity in the last 12 months. In the close-in suburbs of Northern Virginia, Arlington and Alexandria both had positive net sales throughout the second quarter, a turnaround from the first quarter. Alexandria saw 47 sales in the past year followed by Arlington with 33 sales. No new condo projects have been available to purchase in Tysons over the past few years, but there are projects about to start selling and in the development pipeline. In Bethesda, there was one contract sale in the first quarter and 35 sales for the year. Average monthly sales pace in the District during the second quarter was 1.3 sales per project per month. The Capitol Hill/ Riverfront/ SW and Upper Georgia Avenue submarkets had the fastest sales pace with Capitol Hill/ Riverfront/ SW seeing a 111.8% increase from the previous year. The monthly sales pace decreased for the Upper Northwest, Columbia Heights/ Shaw, Central, NoMa/ H Street, and Northeast submarkets. Sales pace increased for Arlington but decreased for Alexandria, while Bethesda saw a decrease from a year ago as well. Average effective same-store sales prices of new condominiums in the District increased over the 12 months ending in June 2017 with an average price of $782/SF in the second quarter of 2017. Prices increased in all District submarkets as well as in Arlington and Bethesda. A total of 1,143 units are currently marketing or under construction in the District, led by Capitol Hill/ Riverfront/ SW and NoMa/ H Street submarkets. Nearly 40% of units in the District’s 36-month development pipeline are located in the Capitol Hill/ Riverfront/ SW submarket. There are currently 320 units actively marketing or under construction in the close-in suburban submarkets in Northern Virginia and 116 units in Bethesda. Over the next 36 months, 465 units are planned in Northern Virginia and 180 units in Bethesda. The inventory-to-sales ratio (months of supply at current rates of sale) in the District is currently 10.9 months, but it varies by submarket. Months of supply ranges from 0 months in Northeast to 39.7 in the NoMa/H Street submarket. Nevertheless, almost all District submarkets are considered to be supply-constrained. We have found over the years that a healthy ratio is between 24 and 30 months of supply – in that range, prices tend to move up gradually if the ratio of “fresh” product is above 65%. In contrast, the rule of thumb in the resale market is that six months of supply is considered to be a healthy ratio. The difference between the two ratios corresponds to the 18 to 24 months typically required to build a new condo project. The close-in suburban submarkets range from 0.5 months in Alexandria to 39.8 months in Bethesda. Condominium resale activity increased over the past year in all Washington area submarkets except for Northeast, which decreased by 17.8%. The average days on the market for the District was 30 days during the second quarter, a decrease from last quarter’s average of 35 days. Market conditions were tightest in Northeast at an average of 12 days while the average condo took 66 days to sell in River East. Average days on the market ranged in the close-in suburbs from 27 days in Arlington to 55 days in Tysons. A shortage of new condo units persists in the market. Conversions are not likely to play a significant role in this cycle as they did in the last, especially in suburban jurisdictions. Unlike the previous cycle when many apartment projects converted to condos or “switched” midway through construction to become condos to meet demand, the inventory of apartment product this time around is ill-suited for conversion because of location or project scale – most sponsors and capital sources do not have the appetite to work through such large and extended sell-out programs. It will take longer to replenish the condo supply in this cycle since it takes more time for new construction or older building renovation/ conversion compared to newer building conversions or pipeline “switches”.

Best personal regards, Mark C. Lowham CEO & Managing Partner Cover: 2501 Pennsylvania Avenue NW, Washington, DC | $5,995,000


Georgetown Brokerage 1206 30th Street NW Washington, DC 20007 Downtown Brokerage 1515 14th Street NW Washington, DC 20005

1506 14th Street NW Washington, DC 20005 ttrsir.com | +1 202 234 3344

McLean Brokerage 6723 Whittier Avenue McLean, VA 22101 Alexandria Brokerage 400 S Washington Street Alexandria, VA 22314 Arlington Brokerage 2300 Clarendon Blvd Arlington, VA 22201 Chevy Chase Brokerage 5454 Wisconsin Avenue Chevy Chase, MD 20815 Annapolis Brokerage 209 Main Street Annapolis, MD 21401

Spotlight: Bethesda & Chevy Chase Bethesda is Montgomery County, Maryland’s primary submarket for new condominium development. Being in close proximity to the District, Bethesda and Chevy Chase offer various transportation options including Metro as well as access to the Capital Beltway. In addition, the planned Purple Line light rail will terminate in downtown Bethesda. Bethesda/Chevy Chase’s central location, access to transit, and growing high-end retail sector continue to attract an influx of new residents and businesses, including the new headquarters for Marriott International. Though typically buttoned-down Washington might not be a locale known for conspicuous consumption in the same vein as say New York or San Francisco, there is certainly a market for an “ultra-luxury tier” of condo units in the nation’s wealthiest metro area. The $1,000+ /SF “ultra-luxury” condo tier should continue to grow as the regional economy maintains positive momentum and developers meet the pent-up demand. In contrast to the top-tier of the single-family home and apartment markets which radiate well into the suburbs, the Washington area’s very high-end condo market is almost entirely concentrated in the District, downtown Bethesda and Chevy Chase, and Rosslyn in Arlington County, Virginia. While the Washington area new condo market sat relatively idle for years following the Great Recession, resale condo units routinely set new price records for the region. Most recently, a penthouse unit at the Parc Somerset condo sold for $8.65 million at $1,283 per SF in a transaction brokered by TTR Sotheby’s International Realty. The 6,737 SF unit is located in the exclusive Friendship Heights neighborhood in Chevy Chase. There are currently 116 market-rate condominium units under construction in the Bethesda submarket. Another 180 units are estimated to deliver in this submarket over the next 36 months. Contract sales volume increased significantly from the previous year with a total of 35 new sales in Bethesda over the past 12 months. The average number of sales per month has slowed down over the past few years, due to a continuous decrease in available units. In the second quarter of 2017, the monthly sales pace in Bethesda was 0.9 sales, below the five-year annual average of 1.1 sales for the submarket and lower than both the District and Northern Virginia averages. Prices averaged $897/SF in the Bethesda submarket in the second quarter of 2017 – higher than both Northern Virginia’s average of $433/SF and the District’s average of $782/SF.

2017 Condo Report: Second Quarter  

TTR Sotheby's International Realty presents the Condo Report: A comprehensive analysis of the residential real estate market in the Washingt...

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