Friday, September 28, 2007

Condo Sales: The Radius

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.

Monday, September 24, 2007

Condo Price Cuts: Through the Floor?

During the year I've been tracking condos listed on MLS to identify sales by flippers and determine their anticipated profit; I've used this information in many of my posts. I periodically monitor this data source for pricing actions as the year progresses to see the degree to which prices are falling, if at all.

The three tables below show a comparison of asking prices for condos. I compared listings from July 31 to those I found on the Internet today Of the 443 condos listed on July 31, 266 are still listed. Of those 266, 96 have reduced their prices since July 31, three have raised their prices (!), and the remainder have made no changes. The tables below show the price changes [click on each table to view an enlarged copy]. Of note:

  • Can you believe a condo's price can be cut by $500,000?
  • The Grant [1314 Massachusetts] has lowered prices on listed units by $2500.
  • Despite its $44,000 price cut, 915 E St #308 [The Artisan] is still for sale at $29,900 more than it sold for in January 2007.
  • The developer of The Ventana [912 F St NW] has lowered the price of #102 by $31,000.
  • At The Atlas [1111 25th St NW], #101 reduced its price $64,500, #723 by $25,000, and #301 by $20,400. That's a loss for #101 and #723 from their original purchase prices in 2005, #301 might eke out enough to pay the real estate commission and break even on its 2005 purchase price.

I think sales like those at the Atlas, units which were bought at the height of the bubble, bear watching. Will such units hold their value or, as the bubble continues to deflate, will values begin to fall below 2005 purchase prices?

Friday, September 21, 2007

Neighborhood Prices: How Much?

As I mentioned in a previous post, I now have the capability to calculate recorded sales on a price per square foot basis. For July, I thought I'd see what the average price per square foot was for each neighborhood. These are tax assessment neighborhoods, not the more commonly known neighborhood names, e.g., Old City II vice Dupont Circle or Penn Quarter or, heaven forbid, NoMa.

The table below shows the average price per square foot for each housing category in each neighborhood. The data available to me is incomplete, so while 769 sales were recorded in July, I have appraisal data for only 585 of those condos and homes whose sales were recorded that month. The biggest data gap is newly built condos.

It's interesting to see the disparity in some areas between the prices of condos and houses. For example, on a per square foot basis, it's cheaper to buy a house than a condo in Cleveland Park. In fact, in most areas a condo is the most expensive form of housing, and that's before condo fees are included.

Disclaimer:

  • The analysis presented is derived from District data on sales recorded during July.
  • 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 sales and appraisal data that I've collected and processed. Errors are always possible.

Monday, September 17, 2007

What? Me Glum?

I sure hope this isn't the impression I'm giving people. I report the data as I see it. The data may be glum, not me.
 
In regards to the show, it'll be interesting to see whether there's any merit to the approach. When I was a home seller and then [for a brief while] a real estate agent, it all came down to price per square foot in determining value. Trying to sell $200/sq ft in a neighborhood of $100/sq ft comps was a tough sell, so to speak, regardless of the granite countertops and the sub-zero refrigerator.
 
Then again, I guess it's really all about the ads, not the approach's merit.
 
 

Sunday, September 16, 2007

MRIS August Housing Report: Return to Doldrums

MRIS released its report on August sales of existing homes and condos [those listed or sold by real estate agents] in the District last Monday. While July's sales were pretty exuberant, August's data indicates that sales have returned to "normal", i.e., flat to negative. Key data points:

  • Dollar volume was down 0.64%
  • The average price up a faint 0.42%
  • The median price fell 0.57%
  • The number of units sold - transaction volume - was down about 1.05%
  • Average days on market increased 3.51% to 59 days

In August we see:

  • Sales volume. Overall, down slightly more than 1%. YoY, condo sales volume was up 7.83% and home sales volume dropped 9.94%. Two of three categories of single family homes saw a decline in sales volume: up 1.69% for 2 bedroom homes; -12.58% for 3 bedroom homes; and -12.3% for 4+ bedroom homes.
  • Dollar volume. In aggregate, down less than 1%. Dollar volume for condos was positive (+10.37%), homes fell 7.41%. Lower dollar volume for all home sizes: -23.21% for 2 bedroom homes; -9.03% for 3 bedroom homes; and -2.71% for 4+ bedroom homes.
  • Average sales price. Flat, up less than 0.5%. Average prices for condos rose 2.36% to $400,819 while homes increased 2.81% YoY to $655,466 [less than July's YoY average price].
  • Days on market. Yes, on average the DOM grew to 59 days, but a closer look shows that more than 2/3 of all homes [67.4%] sold within 60 days, a performance metric that's been pretty consistent these past few months.
  • Inventory. Based on June's transaction rates and active listings, there is a 4.13 month's supply of condos, a decrease of 2.57% from July, while home inventories rose 25.16% to a 5.21 month's supply.

So what to make of all of this?

The data shows pretty clearly that home sales drive the direction of the aggregate average sales price [see below]. Since unit home sales fell in August while aggregate average prices eked out a small gain, I can only assume that, once again, the high end home market is keeping the overall market in positive territory; 6.5% of all units sold [43] sold for more than $1MM, 30 of which were high end homes [those with 4+ bedrooms].

In fact, average prices for high end homes spiked 30.54%. Delving into the data a little more, I find that 16 of 37 detached homes with 4+ bedrooms [43.2% of the total] sold for more than $1MM, ditto 14 of 70 [20%] semi-detached homes with 4+ bedrooms.

Detailed Data

Average Sales Price Trends: 2007

Average Sales Price Trends: Year over Year

Average Sales Price

Dollar Volume

Transaction Volume

Monday, September 10, 2007

DC Sales: July 2007 [Updated]

I've finished my analysis of full value residential sales the District recorded in July 2007. I was interested in seeing what this data would show given the rather robust July sales figures reported by MRIS. What I saw was somewhat muted. YoY, a larger number of condos sold, but for only slightly higher prices. Fewer homes sold, but sales at the higher end lifted average prices. Eighty homes and condos, 10.5% 10.4% of all recorded sales, sold for $1MM or more.

[Update]: Two things have happened since I reposted this morning:

  • I now have physical information [square footage, number of bedrooms and bathrooms] for almost every District property except for those that completed construction within the past year. Consequently, the sales listings I mention below have price per square foot for many - not all - of the properties discussed in this post. See below for more detail.
  • I found another District data error that's forced me to update many of the graphics and some of the text in this post. That $3.75MM home on Eastern Ave actually cost $375,000. The data error was large enough to affect average prices for the housing category [detached], the ward [4], and the zip code [20012].

State of the Market

In July 2007 the District recorded 769 residential sales, 2.53% more than the same month in 2006; this excludes the two outliers I've mentioned in previous posts. Unit sales were almost evenly split between condos and homes while, in terms of dollar volume, homes led 61.33% vice 38.67%.

Viewing the data at a District level, all but three wards had a decent month. Three wards experienced declines in average and median prices, an additional one had lower median prices. Three wards had lower sales volume. Interestingly, Ward 2 had a huge bump in volume yet average and median prices declined about 16.5%; Ward 8, too, had a nice increase in sales volume, but its median price fell 4.52%

Condo sales also continue to dominate Wards 1 and 2. In Ward 1, 64% of sales were condos and in Ward 2, 80%. Condos represented 64% of sales in Ward 8.

Distribution of Sales

The chart below shows the distribution of July's recorded sales by sales price; 53.84% of recorded sales were priced $450,000 and lower. Of those, 61.6% were condos, 65.7% of all condo sales recorded.

Changes in the Market YoY

Average prices were up 5.65% in the aggregate; median prices were flat. Condos had significantly higher unit sales volume, but without similar impact on prices. While May and June had fewer home sales recorded in every housing category YoY, July did slightly better - fewer home sales in 3 of 4 categories YoY. However, the housing category that did well - multi-family converted to single - was only 3.5% of all sales recorded.

Condos

The number of condos sold [existing and new] rose by 14.45% YoY, but prices rose less than 3%. Sales in Wards 1 and 2 [Dupont Circle / Penn Quarter / Logan Circle] represented 54.6% of total condo sales, with 20.1% in Ward 1 and 34.5% in Ward 2 . A few condo buildings are still coming online as others sell their remaining inventory:

Those twelve buildings alone represent 20.4% of all condo sales recorded in June. I expect sales from 1010 Mass will begin appearing in August's data; it'll be interesting to see how that building fares.

Single Family Homes

Although overall demand for single family housing is down 7.3%, higher average prices in two segments [semi- and detached homes] enabled positive growth in aggregate average and median prices. Average prices rose 11.58% although median prices were up less that 1%. Wards 3 and 4 accounted for 71% of detached home sales; the majority of semi-detached home sales were in Wards 4 and 7 [22% and 30.5%, respectively].

Purchase the Data

For $5.00, you can purchase a listing of all July home and condo sales recorded in the District that were discussed in this post.

What's new? I've added new information in this month's listing [see below]:

  • Price per square foot
  • Square footage
  • The number of bedrooms and baths for each unit

[Update] Information is available for all homes and condos.

Note: I use the District's downloadable data, which usually has a 6-12 month lag; this means that the publicly available data doesn't include condos or homes completed within the past year. I'm using the District's appraisal data so the accuracy of my analysis is dependent upon the fidelity of the District's data.


July 2007 Sales Listings


Detailed Data

Aggregate by Zip Code

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

Aggregate by Ward

July 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 sales and appraisal data that I've collected and processed. Errors are always possible.

Tuesday, September 04, 2007

July Sales Data Uploaded

I uploaded data for 769 sales recorded by the District in July to DCHomePrices.com and DCCondoPrices.com last night. The two outliers I mentioned earlier, the $88MM home in Glover Park and the $33MM Kalorama condo, aren't in the Recorder of Deeds database yet so I've excluded them until I can determine the correct sales prices.

I'll post an analysis shortly.