CONDO SALES ACTIVITY SLOWS
Slowing sales activity and modest price appreciation continued in the Washington metro area condo market during the fourth quarter of 2018. Sales activity has been generally inconsistent in recent quarters as inventory for new product remains tight. While new condo inventory is lower than one year ago, price growth remains positive in the District, Suburban Maryland, and Northern Virginia. We expect moderate sales growth as we head into 2019 with new high-end condo deliveries expected in select submarkets. This will likely lead to continued price growth in the future as the months of new inventory are expected to remain chronically low.
Fourth QUARTER 2018 HIGHLIGHTS
Sales: Metro-wide there were 256 new unit sales during the fourth quarter of 2018, which was fewer than the 327 units sold in the third quarter. Net sales over the past 12 months reached 1,430 units, which is down slightly from the prior 12-month period.
Prices: Effective prices for “same-store” new condo units increased by 1.1% in 2018. Northern Virginia again led price growth over the year with 3.9%, while prices in Suburban Maryland increased by 1.9%. Prices in the District increased by 0.9%.
Concessions: Average concession rates (as a percentage of asking price) are at 0.6% as of the fourth quarter of 2018, unchanged from the third quarter of 2018 and down 10 basis points from a year prior.
Pipeline: Unsold units in projects currently marketing or under construction (and not yet marketing) number 2,674 units as of December 2018, a 12% decrease from a year ago. Currently, the submarkets with the largest available inventory are Capitol East DC (690 units), Prince George’s (404 units), and Loudoun/Prince William (359 units).
Starts: A total of 919 units started construction in 2018, well below the 1,638 units that broke ground in 2017. Northern Virginia led the region in new starts with 523 units, followed by the District with 332 units, and Suburban Maryland with just 64 units. We expect starts to rebound in 2019 with nearly 1,100 units projected to start construction, concentrated in the District and Northern Virginia.
Deliveries: A rebound in deliveries occurred in 2018 with over 1,800 units delivered in the region (excluding potential condo switches), mostly in Suburban Maryland and the District. We expect the number of deliveries in 2019 to be a fair amount lower, falling below 1,000 units.
Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals which has been providing consulting and subscription data services to the commercial real estate industry for over 35years.
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