Washington Developers Bet On ‘Special’ Condos
The Washington Post has this update on the DC area condo market. “It’s no secret: After a dizzying five years during which buyers threw ever-larger sums of money at condominium projects, units are languishing on the market and prices have stalled. So why, then, are so many developers still building condos by the thousands?”
“The resounding answer from developers large and small is that..basically, their condo projects are so special, so uniquely designed, strategically located or attractively priced that buyers will continue to choose them over the competition.”
“In the Washington area, more than 25,000 new condos are on the market, up from 18,000 a year ago. Developers are planning to introduce an additional 26,000 units over the next 36 months. Furthermore, about 9,000 more condos are competing for buyers’ attention in the resale market.”"Jim Abdo is embarking on a $1 billion, 3,000-unit project in Northeast Washington, said he is confident that the Arlington condos would sell once buyers saw their 22-foot ceilings, large windows and other features he described as unique. ‘Quality sells through any change in the market place. Period,’ he said.”
“But many developers say they are closely watching the market and adjusting plans. LaZerrick Howard, who owns about 25 apartment units in several District buildings, converted four of his units on the eastern edge of Capitol Hill and began selling them as the Courtney Condominiums in March. After two months, he dropped the asking price from $290,000 to $275,000. In June, he lowered it to $260,000 and sold two of the four units.”
“‘The market slowed down on me,’ said Howard, who also offered to pay for a year’s worth of condo fees and increased incentives offered to real estate agents. In the beginning, ‘I thought they would sell themselves. I was thinking, ‘Do I even need an agent?’ But the market changed so quickly. I had no choice but to regroup and figure out what you need to do to sell.’”
“Christopher Clemente, chief executive of Comstock Homebuilding Cos. in Reston, is tweaking his own plans. Two months ago, Comstock launched a rent-to-buy program in two apartment buildings it bought to convert to condos. The program represents Comstock’s first foray into the rental business. Clemente said the program is proving to be a good way to generate revenue while the buildings are being converted.”
“Comstock said it is also offering breaks on financing, condo fees and closing costs and even lowering prices on some units. ‘Buyers are out there,’ he said. ‘It seems that they’re waiting to make sure their buying decision is a wise one.’”
“Dean Baker, a longtime bear about the housing market, said the market could drop by up to 25 percent and disputed the notion that some well-planned condos would escape unscathed. ‘Whatever makes the place desirable, it’s presumably already reflected in the price,’ Baker said. ‘There’s always going to be a few that escape relatively unharmed. But virtually everyone is going to be affected to some extent.’”
“‘I don’t see a whole lot of good reason for buying a place right now,’ John Delmore, a telecommunications lawyer from Arlington, said last week after a year of on-and-off condo shopping in the District. ‘I think it’s worthwhile to see if prices do come down or if there are more incentives.’”
Out of 10 counties and 3 towns in Northern Virginia there were 783 sales of condos in June 2006.
http://www.nvar.com/market/pressrelease/prgnvjune06.html
Holy cow, thanks for pointing that out. Why did the Post not mention it?
Ben, the Post is among our biggest local cheerleader. It is The Washington Post, though, and even it will publish “the news” when it is so blatantly obvious that they have no other choice.
The full article quotes Abdo, I think, saying that his 87-unit loft style condo has “5,000 people signed up to view units.” The reporter did not even question that outrageous statement. The buyers have vanished, Ben. Your colleague David over at Bubble Meter has posted a lot of pictures of “key-box trees” that adorn all condo projects in our area - at least all those that are too foolish to hide the boxes.
Condomania is over in our neck of the woods. Everyone (just about) knows it.
I keep trying to calculate how many months worth of condo inventory we have using 783 sales a month and 25,000 available condos for sale, but my calculator returns “error - someone is screwed.”
Remember, too, that those are June sales numbers, so likeliest the highest for the year. But the D.C. area is more than Northern VA, so you’d have to consider D.C. proper and Maryland in that 25K number, and find out what sales there are as well. (Of course, adding the additional 26K and the 9K resales make for enormous inventory even considering the D.C. and MD sales).
Consider the population is still declining in District of Columbia, http://quickfacts.census.gov/qfd/states/11000.html
while the building condos all over the city. Arlington and Alexandria have population up 0.5% and 3.4%, but Laudon whopping 50%. I drove to Manassas last weekend early morning, and it took me almost two hours to get there from DC. I cannot imagine the commuter time in a regular work day. The area is otherwise so distant to DC, poorly accessible to anything else, but they build homes in middle of nowhere everywhere in places like Nokesville.
Just went on the Criagslist for Vegas, and houses and there are some houses for rent from 4 months ago still available and the list is getting longer. This has got to hurt.
Simmssays… 10 “INVENTALICIOUS” PRODUCTS
http://www.americaninventorspot.com/top_10_inventalicious_products
‘Quality sells through any change in the market place. Period,’ he said.”
Bullshit. Period.
Of course, ‘quality’ sells. But at what price? That’s the point here. When you have 2-3 years of supply on the market with 3 more years of supply coming on-line in the next 36 months, buyers can be very, very choosy.
In condo’s (or apartments for that matter), quality for me would be;
1. Good soundproofing between units.
2. Multiple undercover car spaces, big enough for a full size vehicle, and preferably individually securable.
3. Large rooms (and yes, high ceilings are nice too).
4. Plenty of storage space.
Get those right, and add the decor-du-jour, and you indeed have units that will preferentially sell (or rent) at any time.
But too many developments have all the sizzle, but none of the steak.
> 2. Multiple undercover car spaces, big enough for a full size vehicle
Should we assume that condo owners need SUVs in DC?
Ah, yes, sorry about my non-US perspective. “Full size vehicle” does tend to mean SUV in the US these days, doesn’t it?
I was more thinking about spaces big enough to open the doors on a full size car without worrying about hitting something.
In the US, full size vehicle means a Ford F350 King Cab Dually with the full 8′ bed that you can land an F-16 on while driving down the interstate.
“…he is confident that the Arlington condos would sell once buyers saw their 22-foot ceilings, large windows and other features he described as unique.”
Whoa. A $1B project with 3,000 units calculates at $33K average building cost per unit, land included. I guarantee that VERY FEW of those units will have 22-foot ceilings. Maybe the penthouses, but no-way-Jose will anything approaching a large or even noticeable percentage of the units have that feature. To paraphrase, “Out, damned hype! Out!”
Can I sublet that extra ceiling space? If so, this baby will be almost cash-flow positive for the first four months of my mortgage. What could go wrong!
No, but you can certainly pay exra $ to heat and cool it.
1B/3K=333K. So assume he thinks he can list them for double that. With carring costs on the capital and overuns, he might be able to get out with his shirt at 375~400K if his units are indeed nicer than the competition. Granted, no one here would touch that project with a 10-foot pole.
Typo: $33K should read $330K.
22′ ceilings? Get some 2×6’s and 2×4’s, some plywood, and you could add a second floor!
The $1billion project is NE DC. Yikes….. if it costs $330k to build these units….. That is the heart of the ghetto and the DC ghetto is really bad…..
“once buyers saw their 22-foot ceilings”
Seems like a waste of space to me. That much space you could put another floor in. What do people do with 22 foot ceilings? Play basketball? I’d hate to be living below them.
I love the title of that article, “But This One Is Special.” It was in huge bold face type on the front of today’s real estate section. I wonder what Abdo and the rest of the supposedly-still-confident builders thought when they saw that.
Thanks to the writer, Tomoeh Murakami Tse, who manages to get ‘digs’ in her pieces like that. I think the Post writers are fully aware of the problems our market is facing, but they have taken the stance that they’ll report the facts and let the readers decide. But you can’t help but know their true feeling when you see a big bolded title making fun of the builders.
newspapers are in a tough spot- 25% ?+ of ads come from RE-
truth is DC will do better than any market,same as 90’s cause the sheople just accept the spending w/o complaint
Dean Baker, a longtime bear about the housing market, said the market could drop by up to 25 percent and…
At least they tried to give a balanced report. Dean Baker, a man on the street that happens to have more than half a brain thinks prices could decline by as much as 25%. That’s not a bear, that’s a wittle cuddly cub or something. How about this? The sky is falling, the condo craze is going to fall of into a bottomless chasm of endless death, the lenders will fail, the government will step in, and, well, to quote someone else from this blog, free DC condos for everyone!
Woohoo! DC condos for everyone!!!
since when is it bad the cost of living goes down… its great news.
lol… around silicon valley we are bracing for 50% drop. Its the only hope we have to keep our jobs in tech industry.
You know, there is so much crowing about the misfortunes of others on this blog, but once the speculators get weeded out, and the unfortunates who bought their single-family homes at too high a price crash, what makes the mockers think that they are immune ? Everyone who depends on either income from employment, is self-employed, or derives income from the stock/bond market is extremely vulnerable, too. There are two old saying I try to remember: 1. ” Pride goeth before a fall ” ( Old Testament Biblical - I don’t remember which book ), and 2. ” Don’t look down on someone else unless you help them up. ” Last night, I watched a program on HBO that was a documentary of interviews with centenarians, all born in 1900 or before. Their viewpoints were fascinating. One old gentleman reminicsed about the beginning of the Great Depression. He said that within 1 year of the 1929 stock market crash, one third of the country ( mostly men ) were unemployed. Business of all kinds failed because they lost their customer base. How much collateral damage is anyone here willing or able to sustain ? Who here is immune from having their own oxen gored, and how much fun are they going to derive from those events when that happens ? Humble pie for everyone, eh ?
Pardon me — it should have read ” from those events when they happen “
DC is / was home of the:
Bubblicious Bench: http://tinyurl.com/gplcr
Bubblicious Wall: http://tinyurl.com/khlkn
Bubblicious Fence: http://tinyurl.com/zebqx
Bubblicious Planter: http://tinyurl.com/grxh9
All these located at recently built condo buildings in the Washington, DC Area.
David
http://bubblemeter.blogspot.com
I’ll even pass on a free one with 14 murders already this month in D.C…
15.
Oops! I got so excited about the granite countertops that I forgot that the ghetto is a dangerous place to live. Honey — do they make Kevlar vests in kids’ sizes?
Yeah this crime factor in DC is having an opposite affect on me from others, it seems. While many people here are oblivious to the crime and continue investing in DC (up until late last fall anyway), all I’ve wanted to do is get out of the shxxhole of a city. I’ve been held up once here, pistol whipped and left unconscious on the sidewalk. Since then I’ve had NO INTEREST in buying in DC. With crime up and becoming more violent, now I’m ready to pack my bags and move to Iowa!
So for all those younguns out there ready to drop $475,000 on a one bedroom condo, go for it, dudes. You’ll have no competition from me.
I had close call like that couple months ago. Couple my friends invested in the brand new condos between MA and NY avenues (The Dumont). That area is really sad. Agressive prostitutues all over the place, gutted cars, unbelievable amount of garbage, yet these condos go there for average 500K. Great place to live and rise children! I heard that they high $$$ would clean up this place, but I heard that already 5 years ago, and I still would not walk there at evening.
Here’s your Post Reporter - she’s a newbie…
““Tomoeh Murakami Tse: Hello everyone. Thank you for tuning in. First, a disclosure: This is my first online chat since starting my job here three months ago, so please be patient with me… I’m still learning about the different neighborhoods, developments and players in the local real estate market. I’m looking forward to hearing about your observations and learning from you. Let’s get started.””
Two months ago, Comstock launched a rent-to-buy program in two apartment buildings it bought to convert to condos. The program represents Comstock’s first foray into the rental business.
I’ve seen “Rent to Buy” occassionally in the rental listings I’ve been checking lately. I wondered if anyone on the board had any insight or knowledge about this set-up. I’m guessing it’s probably not a good deal for the renter, like leasing a car, but I don’t know. Anyone comments?
FYI newspaper reporters have no control over headlines on their articles. They are written by the desk, well after reporters leave for the day. Just means there’s another bear on Tse’s desk having some fun with the FBs…
Rent to buy is old school… its been around for a long while. Very common back in early 90’s … but then was when rents = mortgage costs..
Washington seems like a good place to rent.
Do you like being broke? Keep renting
Renting versus buying
It’s a renter’s market
Housing market turning in favor of renters
#39 Rent or own? Don’t jump to conclusions
The first link doesn’t fit…its pro buying.