Condo Sales: The Grant [Preview]

So I was perusing a listing of condos for sale in the MLS tonight, something I hadn't done in a while, and I noticed a large number of units available at 1314 Massachusetts NW; they've been on the MLS listing for a few weeks. After working Google for a while, I found out that's the address of The Grant, a new apartment-to-condo conversion that must have just finished construction [the conversion project is described here]. As detailed on DCRealEstate.com:

The Grant is a historic building overlooking Mass Ave. on the edge of downtown, currently being converted into condos by local investor-developer Vanguard Realty - Hamilton Group Development. The conversion will turn 85 small apartments into 65 condos with new kitchens, new windows, and w/d in each unit. The building was purchased September 2006 for $5.4m, the conversion process is now underway, completion expected in June. Prices for a studio - falling somewhere between 300 & 400 s.f. - will be mostly $189k, 30 one-bedroom units will start in the 'low $300k's". 4 two-bedroom units will also be available. Sales, first by PN Hoffman, now by Tutt Taylor & Rankin, began in November 2006.

None of the units - sold or not - are listed in the District's real property assessment or real property sales database [today] so I guess the paint's almost finished drying on this one. However, I do note that of the 63 units that were supposed to be built, 32 are listed for sale by the marketing company, which tells me pre-sales, which I assume were attempted, must have been very disappointing.

Three of the 32 listed units are 2 bedroom units, the remainder are 1/1; unit sizes are 630 - 1086 sq ft. The prices for the 1/1 units are in the range of $356,500 - $446,500; price per sq ft is $513 - $566/sq ft. However, don't expect that the price for the least expensive unit, e.g., #804, has the lowest price / sq ft; it doesn't. It is the most expensive / sq ft.

I don't wish these people ill, I'm simply noting that a new building is coming online with less than half the units sold. Its neighbor down the street, TenTenMass ["Move in now!"], should be coming online shortly. It'll be interesting to see if the Grant's situation is a precursor of its success or a reflection of the fact that the Grant was an apartment conversion competing against nearby new construction, e.g., the Whitman and the Sonata.

Condo Sales in the WaPo: Owner vs. Builder

There was an article in last Saturday's WaPo Real Estate section describing the trials and tribulations of condo sellers competing against sales of unsold units by their building's developer. Now that the market's slowed down [to use a charitable word], developers are finding that projects either aren't sold out by the time they're ready for "delivery" or, seeing dreams of instant riches disappear as fast as a snowball in the New Orleans summer heat, buyers [flippers or "investors"] are walking away from their contracts, putting some units back on the market. So the builders have to sell those units, knowing they'll be competing against the project's residents.

Shauntise Harris expected competition when she put her one-bedroom condominium on the market in April.

But she didn't know how intense that competition would get. Not only was she up against some of her neighbors at 555 MassAve, a 246-unit luxury building in the District's Mount Vernon Triangle neighborhood, but she also was competing with the project's developer, the JBG Cos. Nineteen months after starting sales, JBG still had units to unload and was offering a year of no condo fees on one-bedroom units -- an incentive Harris could not match.

"I'm like, you guys are still here?" she said.

555 MassAve isn't alone in offering incentives to buyers [555 MassAve's offer ended July 1]. The Artisan is advertising it will pay condo fees for one year. Last year free plasma TVs, this year free condo fees.

But the article also showed revealed developer mendacity and buyer ignorance that really works my nerves. For example:

But private sellers have one thing in their favor: If they can afford to, they can slash prices. Developers are reluctant to do that because it can upset early buyers.

"We don't want to devalue the property for folks," Blocher [of JBG] said.

I'm sure that's comforting to condo owners at the Artisan, where the developer [JBG] cut the price on unit #1005 from late March's $649,900 price to $589,900 now [MLS #DC6340135 ].

And, finally, this gem [edited to condense the tale]:

Rachel Valentino, an agent at Long & Foster in Friendship Heights, showed client Rebecca Lewis more than a dozen units at the Artisan.

The building had been sold out, but 10 percent of the units went back on the market after cancellations...

Andrew A.J. Johnson, an agent at Long & Foster in Chevy Chase, was representing the owner of a one-bedroom there. He first listed it for $397,500 and offered help with closing costs because the developer was doing so. He then dropped the price to $375,000 but took out the closing cost concession to compensate.

Lewis liked the unit Johnson was selling more than the brand-new ones because she liked the layout, the color of the floors and cabinets, and the terrace off the courtyard. Although it was a resale, it had never been lived in. "I got the benefits of a brand-new unit," she wrote in an e-mail.

"I bet I got a better deal because there were other units available by the developer and many units had been on the market for some time, making the seller eager to sell as well as keep their prices competitive for fear of me just picking another unit," she said.

Valentino knew that the developer would pay closing costs. So she offered Johnson the full price but asked for a closing cost subsidy. Johnson agreed to $9,000. The agents struck a deal in May.

To recap the tale, with the advantage of my database:

• The unit involved had closed 12/1/2006 for $329,900.
• The "investor" tried to sell it for $397,500, a 20.5% bump upwards, but was forced to cut the price to $375,000, a 13.7% bump upwards, because of the "competition" from the Artisan's developer.
• The buyer paid full price and "bets" she got a better deal. She paid $375,000 for a one bedroom condo, which would buy a very nice house in most parts of the country, and "bets" she got a better deal. She committed herself to a monthly note of about $2251 PI [assuming 5% down and 6.5% interest fixed] and "bets" she got a better deal. I may be silly, but I'd want to know I got a better deal when I put down $375,000 for a one bedroom condo in downtown DC [no grocery stores, no trees, not much neighborhood ambiance] with more than 20K condos for sale in the area with another 18K in the pipeline.
• After the $9000 closing credit and an assumed 6% real estate commission, the "investor"might have cleared around $13,000, excluding other transaction and carrying costs. Given the "investor" had to make about 6 mortgage payments on the unit [the District recorded the sale in June], I suspect it was an unprofitable "investment".

P.S. Thanks to pqliving and dcblogs for the links!

DC Sales: First Half 2007

The past week was full of bad news for the US housing market. New home sales were down, sales of existing homes were no better, prices are falling, problem loans extend up to prime borrowers, and the outlook for the overall market is pretty sobering. Wall Street finally opened its eyes and, in herd-like fashion, fell almost 500 points to indicate its shock! that housing was tanking and that credit markets might tighten. I guess they don't read the Wall St. Journal because the evidence was all around them.

Anyone who's been reading this blog should be aware that the District's market hasn't been very robust for the past few months. As I've said several times, the Spring buying season was a bust and, if that's as good as it gets, what does that foretell for the market going forward?

I wish I knew. However, I dug into my database to look back and see what 2007 has been like so far.

BTW, I hope all my Swiss friends have a great Nationalfeiertag on August 1, when they celebrate [in moderation] their country's birthday [August 1, 1291]. I drove by the Swiss Embassy Saturday, it looked like they were having a great time. I'm sure my invitation got lost in the mail...

State of the Market

The District recorded 4381 residential sales in the first half of 2007 (January - June), representing $2.3B in sales. Condos led homes in number of units sold while, in terms of dollar volume, homes led 54.5% vice 45.5%.

Viewing the data at a District level:

• Five wards had lower unit sales YoY.
• Four wards experienced declines in average and median prices.

The Chase Point effect had a significant impact on Ward 3 prices, I suspect, although it was of little help re: unit sales.

Distribution of Sales

The chart below shows the distribution of sales by sales price in the first half of 2007; 58.4% of recorded sales were priced $450,000 and lower.

How to read the chart: each column represents the number of units sold in that price range. For example, the column "$450,000" represents the number of units sold between $351,000 - $450,000.

Changes in the Market YoY

Generally, 2007 has been a lackluster year so far. Looking at YoY data:

• In the aggregate, average prices are up less than 3% while median prices have fallen almost 1%.
• The number of units sold has declined a tad over 2%.
  
• Dollar volume is basically flat.
• Every home category had lower sales volume.
• Prices for homes were a mixed bag. Rowhouses had lower average and median prices while the detached/semi-detached homes saw price growth.

Condos

Condos have had a good year - the number of units sold increased almost 10%. I assume new buildings like the Whitman, the Artisan, Sonata, Brandywine Crossing, et al, played a role in the sales increase. However, even with the new buildings, average prices were up less than 3% and median prices fell about 1.5%.

Single Family Homes

Demand for single family housing is down, but, in the aggregate, average and median prices are higher. The number of units sold fell almost 13% and the dollar volume declined 7.75%. Every category of single family home had lower unit sales and dollar volume. As stated above, price growth was mixed.

Detailed Data

Aggregate by Zip Code

First half 2007 average and median sales prices and unit volume by zip code.

Aggregate by Ward

First half 2007 average and median sales prices and unit volume by ward.

Category by Zip Code

Category by Ward

Caveats:

• Unlike MRIS, my data and analyses include new units [primarily condos] so there will be some differences in my conclusions about the market's state compared to a similar analysis based solely on MRIS reports, which only report sales of existing units sold and/or listed by real estate agents.
• This analysis is of sales recorded by the District during the month as opposed to sales settled in the month, which is what MRIS reports, so there may be some discrepancies because of timing issues. However, I believe the data do provide a helpful indicator of trends in the District.
• Homes listed as multi-family are actually single family homes, but I maintain the multi-family classification to remain consistent with the District's recording system.
• My analysis is based on data that I've gathered from the District. Errors are definitely possible.
  

DC Sales: June 2007

I've finished my analysis of full value residential sales the District recorded in June 2007. Generally, I see a market in which fewer units are selling across the board when compared to the same month in 2006. Average and median prices are being strongly affected by sales of high end homes and condos, i.e., expensive homes are selling and, despite the relatively small size of that market segment, their high prices are pushing aggregate average and median prices higher.

State of the Market

In June 2007 the District recorded 704 residential sales, 7.8% fewer than the previous month. Unit sales were almost evenly split between condos and homes while, in terms of dollar volume, homes led 57.4% vice 42.6%.

Viewing the data at a District level, every ward had significantly lower unit sales YoY. Three wards experienced declines in average and median prices, an additional two had lower median prices. Chase Point condos continue to impact Ward 3, constituting 29.8% of sales in the ward with an average price of $1.28MM.

Condo sales also continue to dominate Wards 1 and 2. In Ward 1, 68% of sales were condos and in Ward 2, 85%.

Distribution of Sales

The chart below shows the distribution of sales by sales price; 53.6% of recorded sales were priced $450,000 and lower.

Changes in the Market YoY

On the surface, condos appear to have bounced back strongly with a 12.5% increase in average price despite a 21.3% decline in unit sales volume. However, as discussed further below, when sales at Chase Point condos are excluded, average prices for condos increased by a much smaller 2.37% and aggregate average price growth is reduced to 1.63% from 5.09%. Both homes and condos experienced a sharp drop in sales volume and dollar volume fell 24.12%. As in May, fewer home sales were recorded in June for every housing category YoY.

Condos

I know I'm repeating myself, but the number of condos sold [existing and new] fell by 23.2% YoY. A number of new condo buildings are still coming online, too, including:

• Columbia Residences (2425 L St NW): 5 units
• Logan Station (1210 R St NW): 10 units
• The Beauregard (2100 11th St NW): 12 units
  
• The Whitman (910 M St NW): 5 units
• The Artisan (915 E St NW): 6 units
• 555 Mass (555 Massachusetts Ave NW): 8 units
• The Sonata (301 Massachusetts Ave NW): 4 units
• Christopher Condos (3101-3111 Naylor Rd SE): 5 units
• Chase Point (4301 Military Rd NW): 17 units
• Barcelona (1435 Chapin St NW): 5 units
• Lofts at Brightwood (5832 Georgia Ave NW): 6 units
  
• Brandywine Crossing (717 - 725 Brandywine St SE): 7 units

Those twelve buildings alone represent 25% of all condo sales recorded in June.

Chase Point's impact on the market is really interesting. Although its unit sales represent 4.7% of all condo sales in June, its effect on average prices was extraordinary. If its 17 sales are excluded from the analysis, the average condo price falls to $414,501 vice $455,603 [unadjusted]. Similarly, its exclusion lops off most of the increase in average price, cutting it from 12.52% to 2.37%, and cuts the increase in median price in half.

Single Family Homes

Although demand for single family housing is down, higher prices in some segments enabled positive growth in average and median prices. In a repeat of May's sales, detached and semi-detached homes had higher average and median prices, rowhouses were positive on median prices, and multi-family homes had lower average and median prices. In the aggregate, average prices were up 3.1% while median prices were up a smidge more than 5% on a 33% decrease in unit sales.

High end housing market is having an inordinate impact on the market. Of the 36 units that sold for more than $1.25MM in June, 26 were single family homes, 10 were condos; 9 of the 10 were Chase Point condos. Although those 26 homes were only 7.5% of all single family homes sold in June, they constituted [I really need a thesaurus] 21.3% of the dollar volume for homes.

Detailed Data

Aggregate by Zip Code

June 2007 average and median sales prices and unit volume by zip code.

Aggregate by Ward

June 2007 average and median sales prices and unit volume by ward.

Category by Zip Code

Category by Ward

Disclaimer:

• Unlike MRIS, my data and analyses include new units [primarily condos] so there will be some differences in my conclusions about the market's state compared to a similar analysis based solely on MRIS reports, which only report sales of existing units sold and/or listed by real estate agents.
• This analysis is of sales recorded by the District during the month as opposed to sales settled in the month, which is what MRIS reports, so there may be some discrepancies because of timing issues. However, I believe the data do provide a helpful indicator of trends in the District.
• Homes listed as multi-family are actually single family homes, but I maintain the multi-family classification to remain consistent with the District's recording system.
• My analysis is based on District data that I've gathered.

Purchase the August DC Housing Prices Report, which includes a listing of all home sales recorded in June, for $5.00.

August 2007

June Sales Data Uploaded

Last night I uploaded data for sales recorded by the District in June to DCHomePrices.com and DCCondoPrices.com.

At a glance, it looks like there was a sharp drop in sales volume as measured by units sold and dollars. Every ward had a drop in unit sales volume, three wards has lower average and median prices, too.

I'll post the analysis shortly.

DC Sales: June 2007 [preliminary]

I've begun processing sales recorded by the District for June 2007. The initial data scrub is completed and it'll take me a few hours to finish the task before uploading it to DCHomePrices.com and DCCondoprices.com.

It looks like The Beauregard and Ashford Manor have started delivery while sales continue at the Whitman, Chase Point, Barcelona, Brandywine Crossing, and the Artisan, to name a few.

The tables below provide a first glance at average prices and unit volume by ward and housing type.

P.S. A late bonne fete national to all my French friends!

MRIS June Housing Report: The Market Tanks

Today MRIS released its report on June sales of existing homes and condos in the District, those listed or sold by real estate agents. In short, the market tanked. Like May, June's YoY data show declines across all metrics [see figure below]:

• Dollar volume was down 16.59%
  
• The average price fell 6.84%
• The median price fell 3.49%
  
• The number of units sold - transaction volume - was down about 10.47%
• Average days on market increased 28.57% to 63 days

It was bad all over. Condos led homes in terms of units sold, homes led in dollar volume. In June we see:

• Sales volume. Overall, down 10.47%. YoY, condo sales volume was down 3.04% and home sales volume dropped 17.16%. All categories of single family homes saw a decline in sales volume: -7.35% for 2 bedroom homes; -20.22% for 3 bedroom homes; and -17.95% for 4+ bedroom homes.
  
• Dollar volume. In aggregate, down a whopping 16.59%. Dollar volume for condos was catatonic (+0.79%), homes fell off a cliff (-25.4%). Lower dollar volume for all home sizes: -14.63% for 2 bedroom homes; -22.91% for 3 bedroom homes; and -28.95% for 4+ bedroom homes.
• Average sales price. Again, down: 6.84%. Average prices for condos surged 3.95% to $427,752, while homes nosedived 9.94% YoY to $659,314 [am I too melodramatic?].
• Days on market. Yes, on average the DOM grew to 63 days, but a closer look shows that more than 2/3 of all homes [70.5%] sold within 60 days.
• Inventory. Based on June's transaction rates and active listings, there is a 4.9 month's supply of condos, an increase of 12.64% over May, while home inventories fell 1.05% to 4.79 months.

So what to make of all of this?

June's numbers nail the Spring selling season, aka 2Q2007; it's a disaster [I'll post the 2Q numbers in a future post]. If April's data was uninspiring and May's drove seasoned real estate agents to the nearest bar capable of mixing a stiff dry martini [three olives, please], June would make a seasoned broker cry. The only bright spot in the market was that condos were marginally higher on dollar volume and average price and three bedroom detached homes had a 12.28% increase in average price.

Detailed Data

Average Sales Price

Dollar Volume

Transaction Volume

Condo Sales: Chase Point

Researching information for this posting caused me to Google a famous line that kept rattling around my head:

"Let me tell you about the very rich. They are different from you and me." F. Scott Fitzgerald, "Rich Boy" (from "All the Sad Young Men")

Thankfully, someone else stated the obvious:

"Yes, they have more money." Ernest Hemingway, "Snows of Kilimanjaro"

The Chase Point condominiums started delivery in March 2007. At a development cost of $68M, it is described as a...

107-unit condominium project located across Military Road from Chevy Chase Pavilion. The condos average 1,450 sq. ft. and range in price from $600,000 to $2.9 million. There is also six affordable units in the project, which was built on the former Friendship Heights' Washington Clinic site.

Built on a spit of land situated between Military Rd NW and Western Ave NW, the building is located near the best and most expensive shopping in the District. For you shoppers, imagine walking out the front door and finding the new Bloomingdale's just across the street! Neiman Marcus and Saks Fifth Avenue are close by, too. To paraphrase, if the mortgage doesn't kill you, the credit card bills will! It's not for nothing that the developer placed a photo of the Cartier logo on the condo's web site.

Chase Point 4301 Military Road NW, DC, 20015

Sales Through June 2007

Of Chase Point's 107 units, the District has recorded 73 sales through mid-June. The chart below shows the distribution of sales by price point:

The table below details the average and median prices for each month's transactions

Looking at the aggregate prices will help you understand why F. Scott Fitzgerald came to my mind... Condo fees average about $600/month, but those for penthouses will run about $1,000/month.

Staggeringly, one fellow purchased four units for a total price of $5.5MM. He did try to flip one of them [unit #706] in late May for $1.721MM, a potential profit of $282,800, but the listing disappeared after a $122,900 price reduction in early June. I assume the listing was withdrawn.

Rental / Resale Activity

To date, no units have been flipped, but that's not for wont of trying. Aside from the fellow mentioned above, four units are currently listed for resale [see below].

This table doesn't do justice to the activity that has been going on. For example:

• DC6305121. Unit #212: this unit been on sale since late May. The price was reduced $58,000 to $1,129,000 within the last two weeks.
• DC6463392. Unit #104 [above]: this unit has been on sale since late May, too, but its MLS number just changed so now it's posted as "NEW THIS WEEK" on Realtor.com. A very small $6,000 price adjustment was made during the MLS switch.

At this time, I find ten units listed on MLS, including the four in the table above.

Three units are listed for rent on craigslist:

• $2900: 2/1. $4000 if furnished.
• $2795: 2/2.
• $3275: 2/2.
  

No unit numbers are provided. I'm hard pressed to believe these rents come anywhere near enough to cover the mortgage, but that's probably not a problem for these folks.

DC Sales: May 2007

I've finished my analysis of full value residential sales the District recorded in May 2007. As I mentioned earlier, I omitted the $23MM mansion (3124 Q St NW) and the home with an extra [Update: two zeroes] "0" in its price from the pricing analysis [the former is still in the distribution analysis below]; one because it's such an outlier, the other because of the District's data entry error.

As I've seen in MRIS's reports on existing home sales, the data confirm the Spring buying season is a bust. Although the District's data is of sales recorded, i.e., after settlement, and can be considered a lagging indicator given the timing, the data continue to show the District's housing market is not robust, at least not as robust as it was in 2005.

State of the Market

In May 2007, 764 residential sales were recorded by the District, basically the same volume recorded in April. The majority of sales were condos, 56.15%; the market's preference for condos continues. One key finding: May is the first month in 2007 when the condo dollar share exceeded 50% and led the market; the condo's share of the total dollar volume of $405.9MM was 51.37%, .

Viewing the data at a District level, half the District's wards experienced declines in average and median prices. All but one ward had fewer units sold. The fact that condos constituted 60% of sales in Ward 3 [70], and of those sales Chase Point condos represented 47% [33 of 70] might help explain its healthy price growth. The average price for a Chase Point condo was $1,181,967 with a median price of $1,004,024.

The data is even more interesting for Wards 1 and 2. In Ward 1, 70% of sales were condos and, in Ward 2, 84%.

Distribution of Sales

The chart below shows the distribution of sales by sales price; 55.4% of recorded sales were $450,000 and lower.

Changes in the Market YoY

Compared to May 2006, recorded sales prices [average and median] are flat, sales volume dropped [off a cliff], and dollar volume fell. I attribute a great deal of the drop in condo demand YoY to the fact that a lot of new condos were delivered in May 2006, more so than in May 2007. However, the 30.5% drop in sales for single family homes should be worrisome. Fewer home sales were recorded in May for every housing category.

Condos

The number of condos sold [existing and new] fell by almost 19% YoY, average prices were up slightly less than 3%, while median prices were down 5%. A number of new condo buildings are still coming online, too, including:

• Columbia Residences (2425 L St NW): 9 units
• Jefferson Row (1830 Jefferson Pl NW): 4 units
  
• The Whitman (910 M St NW): 12 units
  
• The Artisan (915 E St NW): 7 units
• The Sonata (301 Massachusetts Ave NW): 10 units
• Christopher Condos (3101-3107 Naylor Rd SE): 8 units
• The Rhapsody (2120 Vermont Ave NW): 5 units
• Chase Point (4301 Military Rd NW): 33 units
• Barcelona (1435 Chapin St NW): 5 units
  
• Brandywine Crossing (717 - 725 Brandywine St SE): 6 units
  

Those ten buildings alone represent 21.9% of all condo sales recorded in May. In May 2006, buildings such as Rhapsody, Quincy Court, Georgetown Heights, Lofts 14, and the Ventana were coming online.

Single Family Homes

Although demand for single family housing is down, higher prices in some segments enabled positive growth in average and median prices. Detached and semi-detached homes had higher average and median prices, rowhouses were positive on median prices, and multi-family homes had lower average and median prices. In the aggregate, average prices were flat while median prices were up about 6.7% on a 30% decrease in unit sales. I guess what single family housing loses in volume, it makes up in prices.

Detailed Data

Aggregate by Zip Code

May 2007 average and median sales prices and unit volume by zip code.

Aggregate by Ward

May 2007 average and median sales prices and unit volume by ward.

Category by Zip Code

Category by Ward

Caveats:

• Unlike MRIS, my data and analyses include new units [primarily condos] so there will be some differences in my conclusions about the market's state compared to a similar analysis based solely on MRIS reports, which only report sales of existing units sold and/or listed by real estate agents.
• This analysis is of sales recorded by the District in May as opposed to sales settled in the month, which is what MRIS reports, so there will be some discrepancies because of timing issues. However, I believe the data do provide an indicator of trends in the District that could be useful.
• Homes listed as multi-family are actually single family homes, but I maintain the multi-family classification to remain consistent with the District's recording system.