After several years of malaise, the Washington condo market now appears to be in the expansion portion of the recovery cycle as measured by all metrics, while in Baltimore, the tide may have started to turn, but no new product has entered the market in a few years.
New unit sales volume (defined as net binding contracts written with security deposits up) in the Washington metro area during the fourth quarter was 485 units and 2,046 units for all of 2012. Projects that have sold out since 2011 have averaged about 2.8 sales per month in the Washington metro area while projects introduced in 2012 have been selling at an average monthly rate of 10.5 units per month. In the Baltimore metro area, there were 87 net sales during the fourth quarter. For all of 2012, there were 363 sales metro-wide, a decrease of only 5% from 2011. Since 2008, projects have sold out in the Baltimore metro area at an average of 2.3 sales per month.
Effective new condo sales prices are up 3.7% in the Washington metro area from 2011. Only two out of nine condo submarkets experienced price declines. Concessions are down 70 basis points from a year ago, averaging 1.9% of the asking price at December 2012. For 2012, effective new condo prices are up 3.1% in the Baltimore metro area, the first time since 2006 that prices have increased. Meanwhile, concessions average 2.5% of the asking price at December 2012, down 50 basis points from a year ago.
There are currently 2,577 unsold new condominium units that are actively marketing in the Washington metro area. As a result, there is now one year’s worth of inventory of product on the market at current rates of sales velocity in the metro area. Currently, parts of the District, Prince George’s County, and Arlington County & the City of Alexandria have the lowest inventory-to-sales ratios in the metro area. In Baltimore, there are 876 unsold units currently marketing in the metro area, or 2.4 years of inventory.
We anticipate prices in Washington to continue their upward movement over the next 18 to 24 months as the actively marketing inventory remains constrained in the short-term. In addition, we expect Washington metro area sales pace to pick up in 2013 over levels of 2011 – 2012. In Baltimore, sales in 2013 should be slightly higher than they were in 2012 and prices will continue to rise metro-wide.
William Rich is the Senior Vice President at Delta Associates. For more information about the Washington/Baltimore Condominium Market, contact William Rich at 703.535.3545.