George Mason University’s Lisa A. Sturtevant writes an occasional column analyzing the region’s housing data.
Recent anecdotes suggest the demand for condos in the Washington-area market is intensifying.
According to data from Metropolitan Regional Information Systems (MRIS), condo sales are up in the 22-jurisdiction Washington metropolitan area. (The data includes most transactions but may exclude some sales, such as those made by builders without using the multiple listing service.) The number of condo sales regionwide was up 10 percent in 2012 compared with 2011.
The median sale price was also up 10 percent and the average number of days to sell a condo dropped from 76 to 59. A serious lack of inventory seems to be the only thing keeping the condo market from heating up even faster.
In the second quarter of 2012, condo sales started outpacing sales totals from 2011. Prices rose throughout the year. The median price for a condo in the Washington region was $252,000 in 2012, up from $228,500 in 2011. Condo prices in the District of Columbia and Arlington County are now higher in some neighborhoods than they were at the peak of the housing boom. And while prices are up all across the region, the uptick in condo sales and prices has been greatest in the Northern Virginia suburbs of Loudoun and Prince William counties, as well as in Prince George’s county.
The characteristics of the condos sold in 2012 are not significantly different from those sold in 2011. In 2012, nearly half of the region’s condo sales were in Northern Virginia. About a quarter was in suburban Maryland and another quarter was in the District.
The location of condo sales in 2012 was roughly the same as in the year prior, though the District captured a slightly larger share of sales. There was a slight shift to sales of efficiency and one-bedroom condos, and a slightly smaller share of 2-plus bedroom condos. Compared with 2011, there was a slight decline in the share of condos sold in 2012 that were built before 1990.
Condo inventories are at historically low levels. At the end of 2012, there were 1,547 condos listed for sale in the Washington metropolitan area. Given recent sales activity, these listings suggest there is less than two months of inventory in the region’s condo market.
There is a particular shortage of condos for sale in Arlington and Fairfax counties. Fairfax County accounted for about 20 percent of the region’s condo sales in 2012 but currently has less than 10 percent of the inventory of condos in the region. Arlington had 11 percent of the region’s sales but now comprises seven percent of inventory.
Demand should continue to be high for condos in the Washington area in 2013. Many people who have chosen to rent for the last few years see rising prices and low interest rates and may be starting to feel more urgency to buy.
The new rules regarding home loans, which may keep a small set of potential homebuyers out of the market, are largely formalizing procedures lenders already have in place and provide a measure of certainty to the lending process.
The primary reason condo sales could slow in the early part of 2013 is a lack of inventory. Inventories could increase as the outlook among potential sellers improves and they put their condos on the market early this spring.
But new construction won’t make a big contribution to the stock of condos for sale as most multi-family buildings currently under construction are rentals.
Lisa A. Sturtevant is an associate research professor in George Mason University’s School of Public Policy and deputy director of GMU’s Center for Regional Analysis.