It has now been over two years since the COVID-19 pandemic first began. As its impacts on the Washington condo market are continuing to ebb, new economic challenges have emerged that are testing the market. In the wake of high inflation, rising interest rates, and fear of a recession are new issues that the condo market must face as we move toward the end of 2022. Sales in the District, which had a strong first quarter of 2022, have dipped the previous two quarters now (but were up over the past 12 months ending in September of this year compared to the prior period), while Suburban Maryland went up modestly in sales after a down quarter in the second quarter. Northern Virginia maintains its market-leader status with most of the new condo development and sales activity. Meanwhile, price growth has been slowing in the metro area – there is some softness in the District and Northern Virginia, though price spikes persist in select suburban markets. Metro-wide average prices were flat compared to a year prior. In addition, sales pace in the suburbs has been outperforming the District recently, but the city has been catching up, albeit slowly.
THIRD QUARTER 2022 HIGHLIGHTS
Sales:Metro-wide there were 327 new unit sales during the third quarter of 2022, which is down from the 405 new unit sales in the third quarter of 2021. Net sales over the past 12 months reached 1,689 units, which is up 6.7% from the prior 12-month period.
Prices:New sale prices decreased over the 12-month period ending in September 2022 by just 0.1% metro-wide.
Concessions:Average concession rates (as a percentage of asking price) are at 0.8% as of the third quarter of 2022, up 40 basis points from a year prior.
Pipeline:The number of available units actively marketing decreased by 18% from 12 months prior while the total 36-month pipeline decreased by 11% from a year ago. There is currently 12.6 months of inventory on the market, down 2.7 months from a year ago.
Starts:1,143 new condo units are expected to start construction in 2022, down from 1,806 in 2021.
Deliveries:We expect the number of condo deliveries in 2022 to decrease slightly from 2021 (when 1,809 units delivered) to 1,722 units (excluding potential condo switches).
Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals which has been providing consulting and subscription data services to the commercial real estate industry for over 35years.
