The owner of a typical condominium resold in the District between April and June made a 3 percent profit for every month it was owned, for an average increase in price of 36 percent a year, a new statistical analysis shows.
The study -- by George B. Altoft, senior residential assessor for the city -- also found that there are 12,500 condominiums now and that they account for one of every nine dwellings in the District. Five years ago, they were one out of 100 dwellings.
The condominium price data, covering a random sample of 100 of the 587 units sold in the second quarter, "shows what a gold mine condos have been, especially for tenants in converted buildings," Altoft said.
Month-to-month appreciation in some converted buildings ranged as high as 18 percent -- an annual rate of 216 percent -- and resulted in thousands of dollars in profits per month of ownership for former renters who later sold.
In one building, the Carriage House at 2201 L St. NW, a tenant purchased his unit for $24,840 last October and sold it in April for $53,000 -- an increase of 113 percent in six months.
A unit in the Wyatt Dougherty condominium at 1032 Sixth St. NE was purchased for $18,850 in March 1978 and was resold last April for $43,000, a 128 percent increase in 24 months, or 5.3 percent a month.
The owner of an apartment at 4200 Cathedral Ave. NW resold his unit in May for $79,900, having bought it for $39,000 last September. The condo chalked up a 105 percent gain during that period, or more than $6,000 a month.
Dozens of other examples from first-time resales are documented in the study. In general, Altoft found, the largest percentage gains came from units purchased at tenant discount prices and then put back on the market within 18 months. Units bought in the early 1970s -- the study covered purchases made from 1972 through 1979 -- tended to appreciate by 1 1/2 to 2 percent a month.
That sort of appreciation rate over such a long period of time equals or outstrips that of most detached houses in the city, Altoft said.
The capital gains involved in long-term condominium holdings have been "phenomenal," he said, citing $40,000 units purchased in 1975 that appreciated by $1,000 a month for 50 months or longer. For example, one conversion unit purchased in December 1975 at Cathedral West, 4100 Cathedral Ave. NW, was sold this spring for $183,000 -- a $2,300 profit for each of the 52 months it was owned.
Altoft's statistical study included newly constructed buildings as well as units in conversions of rental properties to condominium ownership. All the data came from publicly recorded tax filings required by the city when any real estate is sold. Altoft's office monitors residential price movements in the city's 56 neighborhoods to set property tax assessments each year.
The senior assessor's study was completed shortly before the City Council voted to clamp new restrictions on condominium conversions, but the report was part of its deliberations.
Altoft said he views the price increases and heavy swing to condominium conversion as "a very positive development for the District, not something that should be stopped."
Moderate-income tenants in rental apartments "ought to be able to buy their units and protect themselves against inflation," he said in an interview. "The city benefits from higher real estate property taxes, and the tenants become owners of something that's growing in value. Condos are the only form of real estate open to people in the city who can't afford a traditional, single-family home."
Altoft noted that, although many condo units have doubled in market value in just a few years, the average price of units available for sale in the city has remained flat for the past year at about $70,000. The high proportion of new sales in conversions made to tenants for discount prices of $24,000 to $35,000 "has kept down the average citywide price," he said.
Detached houses are selling for an average well above $100,000 in most District neighborhoods. Sales of such houses are down by about 20 percent from last year, but condo sales in the first half of this year were up by about 30 percent.
Some sample transactions from the condominium survey are shown below.