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Canyon Ranch Abandons Plan For Md. Condos
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After years of condo conversions that narrowed the supply of apartment units, the region's rental market has become extremely attractive for developers. Rents rose 7.5 percent in the past year, while vacancy rates fell to 1.4 percent, well below the national rate of 5.6 percent, according to a market report by Delta to be released in a few days. Despite the scrapped condo plans, there are nearly 24,800 new condo units on the market, up from 19,400 a year ago. Another 25,700 units are scheduled to enter the market in the next three years.
At the current estimated sales rate of 8,000 to 8,500 units a year, the 24,800 unsold condos represent about a three-year supply. As the inventory rises above three years, there is a greater likelihood of price declines in some areas, Delta said.
Condo prices in the District and Northern Virginia are "flat to slightly down," while prices in Maryland, which did not immediately jump in on the condo craze, are "flat to slightly up," said Greg Leisch, Delta's chief executive.
"This is a supply-driven problem, not a demand-driven problem," Leisch said.
Condo sales have been falling rapidly this year. In the past three months, 1,331 new units sold in the Washington region, the lowest quarterly figure in almost three years, according to Delta. About 2,600 units changed hands in the previous three months; 3,200 units were sold during the comparable period last year.
"Prices are no longer rising. Buyers don't feel any urge to beat the price clock," Leisch said. "On the back of their minds, there's a fear that they might be the last fool to buy at the top of the market."
Adding to the lack of urgency, Leisch noted, are interest rates that held steady in recent months after inching up since last fall.
Staff writer Dana Hedgpeth contributed to this report.
