At the same time that rent growth is skidding to a halt in the local Class A rental market, a new Delta Associates report shows that newly-built condominiums are seeing prices level off in all but a few sub-markets.
Overall, new condo prices were flat around the region in the last quarter, increasing by less than one percent; the Upper Northwest and Central sub-markets of DC were the lone exceptions, seeing prices go up by 8.3 and 3.2 percent, respectively. In many ways, the new condo market is following a similar path to that of DC’s overall housing market, where increased inventory is keeping prices in check.
With nearly a year’s supply of new condos on the market, the area-wide average inventory is resembling a buyers’ market. In DC proper, supply rose by four months over the past year, from 8.8 to 12.8 months. With 794 units, the Capitol East neighborhood has the largest active supply in the city.
Despite high supply levels, Delta Associates maintains an optimistic outlook for the new condo market, anticipating that demand will ramp up along with continued job growth and a slowing construction pipeline.
“The total 36-month pipeline has steadily shrunk from just under 7,000 two years ago to 5,778 today,” Jonathan Chambers of Delta Associates explains. “We expect annual price growth to remain flat through the remainder of 2017 into the first quarter of 2018 before accelerating in the following periods, contingent on continued economic expansion.”
Sub-market definitions:
- Capitol East includes Capitol Hill, Capitol Riverfront, Hill East, NoMa, Southwest Waterfront, and everything east of the Anacostia River.
- Upper Northwest includes most neighborhoods west of Rock Creek Park.
- Central DC includes West End, Dupont Circle, Logan Circle, East End, and Mt. Vernon Square/Triangle.