Report: 10,000 Unsold Condo Units in D.C.

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A summary of the Year-End 2008 issue of Delta Associates’ Mid-Atlantic Condominium Market Report:

New unit sales volume (defined as net binding contracts written with security deposits up) in the Washington metro area during the 4th Quarter was 506 units, similar to the 1st Quarter. For the year, there were 1,704 sales, about 56% less than 2007. In the Baltimore metro area, there were 14 new unit sales during the 4th Quarter and 48 sales for the year, a reduction of more than 90% from 2007. In the Philadelphia metro area, there were 174 new units sales during the 4th Quarter and 1,015 sales for the year, a decline of 37% from 2007.

While holding up much better than the single-family market, condo sales prices have dropped. Effective new condo sales prices were down 4.5% in the Washington metro area from 2007 with bigger declines in Suburban Maryland. In the Baltimore metro area, effective prices dropped 11.4% during the same time period, while in the Philadelphia metro area, effective prices increased by 3.6% in 2008.

Concessions are down from a year ago in Washington & Philadelphia, averaging 3.5% and 3.4%, respectively, of the purchase price at Year-End 2008. In Baltimore, concessions are up 550 basis points from a year ago, averaging 7.0% of the purchase price.

There are currently 10,058 unsold condominium units that are actively marketing in the Washington metro area, compared to 3,339 units and 4,161 units in the Baltimore and Philadelphia metro areas, respectively.

Projects that have sold out in the past couple of years have averaged about four sales per month in the Washington & Philadelphia metro areas and about three sales per month in the Baltimore metro area. Upon delivery, projects are seeing buyers fail to settle – back out of sales contracts – from 15% to 50%, or higher in a few cases.