The warmer winter weather caused condo sales to pick up in the Washington region in the last quarter, but condo buyers may have found their options near the center of D.C. were slim. A new condo report from Delta Associates shows that there are just 94 finished units left to sell in Central D.C., with a couple hundred more still under construction (Loudoun County, by contrast, has a remaining inventory of 1,198.)
The issue speaks to both the demand for real estate in Central D.C., which includes neighborhoods like Dupont Circle, Logan Circle and Mount Vernon, as well as some of the challenges developers face with new projects in crowded urban settings.
For one thing, there’s little room for more condo projects in certain parts of the District, according to William Rich, the director of Delta’s condo practice.
“From 2003-2010, most of the condo sales occurred in Central D.C., but those areas now are built out,” Rich said. “More condo development has been going on in Columbia Heights, Shaw and in Capitol Hill, but that activity is not occurring at the same level as in Central D.C. in the earlier part of the decade.”
What’s more, developers are less inclined to build condos in the current tight lending environment, when fewer buyers are likely to be able to obtain financing.
If they can’t get enough buyers interested, condo developers can opt to turn a condo building into an apartment complex — and to convert it back into condos when the market picks up again. But in D.C., the switch back to condos can be difficult because of the District’s strong renter’s rights protections. That meant rentals have, in many cases, been the surest bet for developers in recent years.
“Because the apartment market has been more desirable,” Rich said, “if developers had the choice between condos or apartments, they would build an apartment.”
Overall, Delta reports that there were 457 condo sales in the first quarter of 2012 in the entire D-M-V region, which was an 8.5 percent increase over last year. Rich attributes the spike to low interest rates and the warm condo-hunting weather.
More than 60 percent of the condos up for sale in the region this quarter are new. A few months ago, the inventory consisted of mostly old units that had lingered on the market through the recession.
And if you’re looking to buy a condo anywhere in the Washington region sometime soon, you may want to hurry. Although condo prices have been basically unchanged over the past year, Rich predicts that condo prices will start to rise soon because now that the older units have been sold off, the newer offerings will be more expensive.