The Radius is another one of those buildings that was going to be apartments, but once the real estate boom hit and the developer saw the bigger and quicker payoff, it was transformed into a luxury condo building.
At an estimated development cost of $26.4M, it is described as:
The Radius at Logan Circle (formerly Sovereign Circle) was originally designed for 170 “hard loft” style apartments, but converted to condos in early 2004. The units will offer 10 foot ceilings, exposed concrete and ductwork, dramatic walls of windows.
While they converted the building from apartments to condo and to The Radius, they neglected to change the name of their web site's home page.
The Radius 1300 N St NW, DC, 20005
Sales Through July 2007
The District has recorded 191 sales of the Radius' 170 units through mid-July. Unit #419 has not sold, it appears to be owned still by the developer. Unit #19, included in the total sold, does not have a sales price recorded in the District's real property sales database and the District's Recorder of Deeds; I've excluded it from the price analyses in this post.
The table below details the average price, average price per square foot, average unit size, and the number of sale for each unit size [studio, 1, and 2 bedroom units] at the Radius.
Rental / Resale Activity
Twenty-two units have been resold since 2004. This building's appraisal data is available so I've been able to calculate price per square foot for each sale.
I've calculated the seller's return on each sale differently this time. In the past, I simply divided resale price by original purchase price, minus 1, to determine the per cent price increase [or return]. That is, if a unit originally purchased for $50,000 was resold for $100,000, I'd report a 100% price increase [ $100,000 / $50,000 - 1]. However, that ignores the passage of time between purchases. - a 100% return in a year is much more impressive than one that occurred after 20 years.
For the Radius, I used compound annual growth rate [CAGR] to measure the resale's return. As a wiser site explains:
CAGR: the year-over-year growth rate of an investment over a specified period of time.
The compound annual growth rate is calculated by taking the nth root of the total percentage growth rate, where n is the number of years in the period being considered.
CAGR isn't the actual return in reality. It's an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. You can think of CAGR as a way to smooth out the returns.
I thought CAGR would indicate whether a condo was a worthwhile long term investment vice putting money in a one-year T-bill yielding 4.03%. I think of it as a quasi-IRR hurdle rate. It turns out a one year T-bill is a better deal: only 7 of 22 resales had a CAGR greater than 4.03% and of those, the units with the highest returns were those purchased in 2004 near the peak of the recent housing boom [units #10, #114, #208, and #508] and resold in 2005. Oddly, none of the top seven are two-bedroom units; only 2 such units have resold [units #222 and #406] and both yielded negative returns.
Of course, the CAGR omits all transaction and carrying cost considerations.
As of September 25, two units are listed for rent on craigslist:
One unit is currently listed for sale [MLS DC6517905]. Unit #15, a 2/2 with 1054 sq ft and a $527/month condo fee, is available for $579,900, down from $629,900. It had been purchased for $554,900 in October 2004. If it sells at its current price, assuming a 6% commission and excluding any other transactions costs, the seller will lose at least $9800. The seller offers the buyer the choice of one of two enticements: a year's condo fees paid or keep the current "tenents" who're paying $2900/month for one year. Given that the realtor's web site estimates the condo's mortgage at the offered price will be [at least] $3460, I'd send the "tenents" packing.