Saturday, March 29, 2008

DC Sales: January 2008

I've finished my analysis of full value residential sales the District recorded in January 2008. It continues to be ugly out there. Yes, aggregate average prices are up, but that's a surface story sufficient only for those who can't be bothered to peel the onion and prefer to believe hoohah. In the reality based world, sales volume in the District is way down, condo prices are flat, and single family home prices continue to appreciate despite falling sales volume.

One data point I noticed in January's data was the increased number of homes purchased by banks, presumably foreclosed.

All data has been uploaded for viewing on DCHomePrices.com and DCCondoPrices.com.

State of the Market

In January 2008 the District recorded 489 residential sales, 22.75% less than the same month in 2007. Dollar volume fell, too. "Fell" may not be strong enough. Collapsed? Surrendered? Capitulated?

All but two wards had lower sales volume. Wards 1, 2, and 8 had positive growth in prices; Wards 5 and 6 were negative; Wards 3, 4, and 7 split the difference. Condo-dependent Ward 2 had the steepest drop in sales volume, down 53.19%; the "invisible hand" continues to slap that ward around.

Condo sales continue to dominate Wards 1 and 2. In Ward 1, 79.35% of sales were condos and in Ward 2, 61.4%. More than half of the District's semi-detached home sales were recorded in Ward 3, 53.65%.

Distribution of Sales

The chart below shows the distribution of January's recorded sales by sales price.

Changes in the Market YoY

In the aggregate, average prices were up 5.43% while median prices were relatively flat, falling 0.05%. Sales volume continued its downward spiral, falling 22.75%; condos fell 25.2% and homes declined 19.32%.

Condos

The number of condos sold [existing and new] fell 25.2% YoY. Average prices nudged up slightly, 1.88%, while median prices teetered down 0.11%, essentially flat. Sales for TenTenMass continued to dribble in. Several condo buildings have come online (e.g., CityVista) and others continue to sell their remaining inventory (e.g., the Whitman):

Single Family Homes

Overall demand for single family housing is down 30.94%. Average prices were up 7.97% and median prices were up 7.25%. All categories of houses had declining sales volume, down 16.28 - 24.05%. Once again, Ward 3 has the honor of having the highest average and median prices in the District.

I continue to believe the high end homes - those costing more than $1MM - are skewing the results. The data show that the average sales price for a District home was $571,458 in January. Of 213 homes sold, 27 sold for more than $1MM for a total dollar volume of $40,343,953; all but two were in Wards 2 and 3. In other words, 12.68% of January's recorded homes sales accounted for 33% of the dollar volume. Excluding these homes, the average home price in the District is $437,455, about 25% less.

If I were inclined to be even more left brained, I'd say that excluding these 27 homes would reduce the District's aggregate average sales price to $424,949 vice $484,009.

Which is why I called it hoohah.

Purchase the Data

For $5.00, you can purchase a listing of the January home and condo sales recorded in the District discussed in this post. Information in the listing includes [see below]:

  • Address
  • Sale price and sale date
  • Unit number [if a condo and if available]
  • Price per square foot
  • Square footage
  • The number of bedrooms and baths for each unit


Note:
I use the District's downloadable data, which usually has a 6-12 month lag, meaning that the data doesn't include condos or homes completed within the past year. Data may not be available for all properties. My analysis is dependent upon the completeness and fidelity of the District's appraisal data.

January 2008 Sales ListingsAdd to Cart


Detailed Data

Aggregate by Zip Code

January 2008 average and median sales prices and unit volume by zip code.

Aggregate by Ward

January 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.
  • My analysis is based on District sales and appraisal data that I've collected and processed. I've deleted those sales that appear to be of questionable data quality. Errors are always possible.
  • My analysis is limited to condos and single family homes; I omit properties the District classifies as multifamily conversions. I'm sure I'm excluding some properties that are legitimate single family homes, but I want to eliminate uncertainty.

Monday, March 24, 2008

January data uploaded

I've uploaded data for residential sales the District recorded in January 2008 to DCHomePrices.com and DCCondoPrices.com; it's available for viewing now. The data analysis is forthcoming.

Sunday, March 23, 2008

"The Market"

I had no idea that my posts about the Sonata and Fennessy Lofts would generate such heat, especially about the "invisible hand of the market."

To lower the heat, I'll concede that each building's developer is reacting to market forces by lowering the prices of the remaining units. Market to owners who just saw their comps drop:

Or, more likely, je m'en fiche!

Let's kick it up a notch. The Metropole of "drop. dead. sexy... residents" fame is about a year late in delivering its units. I know many units were sold pre-construction back in 2005. Now that the developer's missed the market and the market says condos are worth less [see the Sonata and Fennessy Lofts], has s/he adjusted prices? If I had put money down in 2005, should I expect the Metropolis Development company to send me a letter telling me that they've adjusted my contract price downwards by, let's say, 10%? Is unit #222, which I've always lusted for, finally in my price range [and I'm not talking a range that can accommodate 6 zeros to the left of the decimal point]? Does anyone know?

Friday, March 21, 2008

Fennessy Lofts: Because I care

I wasn't even aware Fennessy Lofts had started delivering. I drive by it occassionally and had never noticed anything other than a construction site.

After checking the District's real property sales database, I don't find any sales recorded for it. Yet they're already offering $45,000 off selected units.

I give them credit for one thing - they're not doing a Sonata.

Sunday, March 16, 2008

Sonata Condominiums: Equity Disappears

While looking at the condo ads in the Wapo real estate section Saturday, I noticed that the Sonata (located at 301 Mass Ave NW, "The View is Priceless") is advertising price reductions of up to $75,000. To recap:

The Sonata is a 12-story, 75-unit condo - the first to go up in rapidly gentrifying Mt. Vernon Triangle, near the entrance to I-395. Developed by Wilkes / Quadrangle (now doing Madrigal Lofts and the Concerto). With a small footprint, the Sonata has only a few condos per floor, with 10' exposed concrete ceilings for an attempted loft effect. The project sold out in mid 2005 after only 2 months on the market at the height of the condo frenzy, building was completed in December 2006, settlements to begin January 2007. Built by Glen Co.

Moreover, the ad touted that only four units are left! And then only listed prices for three. But didn't account for the other 8 that haven't sold per the District. Confused? According to the District, 75 units were built and 63 have sold, leaving 12 that are still available. But only four are left!

Leaving confusing mathematics aside, it's interesting to see how much equity is being destroyed for those who already own units in the Sonata.


Unit #207

Model: Beethoven

Old price: $451,900

New Price: $386,900

Reduction: $65,000

Unit #303

Model: Haydn

Old price: $640,900

New Price: $599,900

Reduction: $41,000
Unit #1103

Model: Corelli

Old price: $825,000

New Price: $750,000

Reduction:$75,000

If I owned a unit at the Sonata, I think I'd be a tad unhappy that the developer is lowering prices 6.4 - 14.4%, less than a year after I closed on my unit.

Wednesday, March 12, 2008

MRIS February Housing Report: More of the same

MRIS has released its data for sales of existing home sales in February 2008. Fewer units sold, lower dollar volume, condo prices down, single family home prices up. More of the same.

The data continue to show that single family homes are selling for higher prices despite collapsing sales volumes. I think the high end market continues to distort how well the overall market is performing. Of the 369 units that sold, 26 - or 7.05% - sold for more than $1M. Lacking data granularity, it's hard to discern the dollar volume weighting of those units. However, if each sold for only $1M they'd represent slightly more than 14% of the month's dollar volume.

Key YoY data points:

  • Dollar volume was down 32.66%
  • The average price was up 2.38%
  • The median price rose 6.45%
  • The number of units sold - transaction volume - was down, 34.22%%
  • Average days on market... ah, who cares.

In February we see:

  • Sales volume. Overall, down 34.22%. YoY, condo and home sales volume dropped through the floor, down 39.74% and 27.8% respectively. Sales volume was negative across the board. For the second consecutive month, condos represented less than half of the units sold, 49.32%.
  • Dollar volume. In aggregate, down 32.66%. YoY, condos were down almost 41.15% while homes were down 26.23%. Dollar volume was negative for every category of housing except two bedroom detached. Otherwise, it really became "which did worse?" The "best" [least worst] performance was -4.46% for detached homes with 4+ bedrooms.
  • Average sales price. Overall, up 2.38% YoY; basically flat when adjusted for inflation. Condos fell 2.35% to $381,786 while homes increased 2.17% YoY to $615,201.
  • Days on market. DOM was 92 days. Fact? Fiction? Who knows? Assuming fact, then it's gotten worse since January [87].
  • Inventory. Based on the month's transaction rates and active listings, there is a 8.28 month supply of condos, a 12.84% decrease from January, while home inventories are at 9.08 month's supply, essentially no change from January.

Essentially, February continues a downward trend that began in July. When dollar and sales volume each fall by more than 30%, it ain't good out there. Slip sliding away.

Detailed Data

Average Sales Price

Dollar Volume

Transaction Volume

Tuesday, March 11, 2008

Why do they say such stupid things?

I received a comment today from the Norwood Tenants, the folks whose problems with Tenacity Group is mentioned in Sunday's WaPo article [see this post]. To sum up, the residents held a protest to bring attention to the fact that the elevator in their 7 story building wasn't working and hadn't for a while. They served lemonade during the protest.

At 1417 N St. NW, tenants also resisted a condominium conversion. A company hired by the owner had approached them in 2006 about converting, also offering money to move out or the chance to stay as renters in the new condominium complex. Tenants instead called on the owner to make building repairs.

After the elevator in the building broke down last summer, tenants protested in the lobby, where they served lemonade. Shortly after, an attorney for the owner sent a letter to two tenants who had organized the protest, saying that they had breached the terms of their tenancy for "loitering in the common areas," among other things.

"For a minute, your heart stops," said tenant Silvia Salazar, who had worked with the tenants who received the letter. "You think, 'They're coming after me now.' "

Erik Bolog, managing partner with Tenacity Group, the asset manager for the owner, said that the company respects the right of tenants to meet but that the protest in the lobby wasn't properly scheduled and raised safety concerns.

"If by chance there was a fire in that building and people could not get out because a table was in the way, then people would be critical of the ownership for allowing that to be going on," Bolog said. " . . . If lemonade spills on the floor and people slip, it becomes a safety issue."

Can you believe he really said that? Of course, the penalty was commensurate with the "crime" - people were evicted from their homes.

Talk about a Black Swan event...

Sunday, March 09, 2008

Rectify your "mistake"

The WaPo started a series today, "Forced Out: The Cost of DC's Condo Boom", that depressingly retells the old story of how the well-financed and well-lawyered people in this world always win out over the poor and powerless. In a nutshell:

Landlords determined to cash in on a lucrative real estate market pushed thousands of tenants out of apartments across the District in recent years and then reaped more than $328 million by converting the buildings into condominiums.

While the story itself isn't new, what's infuriating is how the landlords use DC law to push people out of their homes without paying any statutorily required fees to the District.

Nearly three decades ago, city leaders created a law that gave tenants extraordinary power: the right to vote on whether property owners could convert rental buildings into condominiums. The law also requires owners to pay the city a fee on the sale of new condominiums, which would help displaced renters with relocation costs.

But as the District's real estate market thrived, landlords found a way out: The law doesn't apply to vacant buildings.

By emptying buildings and taking advantage of a provision known as a "vacancy exemption," landlords can avoid the tenant vote and the tax and turn rental apartments into condominiums. City officials have granted the exemptions even when government records chronicled widespread evictions and buildings riddled with code violations.

In the past four years, nearly three-quarters of the landlords who received permission to begin converting apartment buildings into condominiums did so through a vacancy exemption, not a vote by tenants -- saving $16 million in condominium conversion fees while families across the city lost their homes.

Basically, they quit making repairs to their apartment building, effectively rendering them uninhabitable. Some tenants went without heat or hot water for years. Once all, or close to all, the tenants had "vacated" the landlords could then convert their "vacant" apartment buildings to condos without paying any fees to the District. A nice deal for the developers, too bad for the tenants. See this to understand how it's done. Kudos to the WaPo for a great graphic.

Now, I'm not going to start a screed about big, bad developers taking advantage of poor folks and using all legal loopholes at their disposal to get their way. It's an old story and it won't stop because of one angry posting on a blog.

However, please do not insult my intelligence by saying you - the developer - weren't aware that your lawyer had told the city the building was "vacant" when it wasn't or that a "mistake" had been made in the paperwork. An example:

Brandywine Station

On Brandywine Street SE, David Tolson's company paid $6.1 million in 2005 for a series of apartment buildings that had been cited for hundreds of code violations. Only about 18 families were left in a complex of more than 100 units.

A manager for Tolson sent a letter to tenants saying the company "wants to vacate apartments" and offering buy-out payments. Once again, tenants resisted, saying the offers were sketchy. They also complained that repairs weren't being made, with rats still running through their apartments. Within months of Tolson's buying the complex, tenants began receiving eviction notices for nonpayment of rent. Records show that in several cases, Tolson settled with tenants, paying them to leave.

By 2006, most tenants had left, with one striking a deal to stay on as a renter. When Tolson applied for vacancy exemptions, he said the property had been vacant when he bought it.

Tolson sold $14.9 million in condominiums, saving nearly $750,000 on the conversion fee.

"I thought, 'That man is sitting back there laughing at us,' " said tenant Yvania Flakes, a data entry specialist, who negotiated a deal to remain as a renter. She has since moved to Virginia. "I was hearing stories every day from tenants about how if they didn't move out, they'd get evicted. [Tolson] managed to get everybody to run."

Tolson, who had received a vacancy exemption on an earlier property as well, countered that the Brandywine project has been a success, with the buildings cleaned up and turned into affordable housing. He acknowledged that telling the government the buildings were vacant when he bought them was "a mistake," but he said that the eviction notices were legitimate and that he made repairs.

OK. You were smart enough to:

  • Buy and finance the property
  • Get the financing necessary for the redevelopment
  • Design the new condominiums and select the materials for the constuction
  • Work through all the building permits to redevelop the property
  • Hire the contractors to redevelop the property
  • Manage the construction process and all its headaches
  • Placate the banks
  • Leverage the US tax code to improve the development's profitability
  • Deal with the District's real estate folks in platting and recording the condominiums
  • Draw up the condominium association papers
  • Market and sell the properties
  • Record the sales with the District

And apparently you knew what you were doing because Brandywine Station has delivered and most, if not all, of the condominiums have sold. But in all of that, you made one small "mistake" in the process that saved you $750,000.

Fine, you've admitted you made a mistake so there's an easy way to solve the problem: rectify your mistake and pay the District the $750,000 it's owed. As a District taxpayer, I thank you for stepping up and doing the right thing.

Since that's as likely as "the other white meat" flying, maybe the District's city council ought to make sure this abuse ends. Here's how you can contact them to encourage them to end all the developer "oversights" and "mistakes".

Saturday, March 08, 2008

DC Sales: January 2008 (Preliminary)

As I mentioned earlier, I've begun processing sales recorded by the District in January 2008. Below are preliminary data for average prices and sales volume, by ward.

Thursday, March 06, 2008

Condo Sales: Saxon Court [Update]

This is the third and, I promise, final installment of the ongoing saga of Saxon Court [1440 Church St NW] unit #504.


View Larger Map

You may recall that the first Saxon Court post was inspired by unit #504's sale. In the post I said:

My interest in Saxon Court was piqued by an article in the Real Estate section of the Examiner's October 5 issue [sadly, the article isn't on the Examiner's web site]. Samuel Goldreich wrote about a couple who'd done what I've thought of doing: they'd bought two condos and combined them into one unit, #504 at Saxon Court.

The unit's asking prices was $1,595,000. Later in the post, I did a market analysis and estimated, based on prior sales in the neighborhood in my database, that "unit #504 would be valued at between $1,355,740 and $1,433,634, roughly $150-240K less than they're asking, but a decent bump from the [original] purchase price."

In a subsequent post one month later, I mentioned the price has been reduced by $95,000 to $1,500,000.

Well, I'm scrubbing data for sales recorded in January 2008 and what should appear? 1440 Church St NW #504!

So let's review:

  • Initial price October 2007: $1,595,000.
  • I value it at $1,355,740 - $1,433,634.
  • One month later: $1,500,000.

And in January 2008 it's recorded as having sold at $1,425,000, $175,000 less than the initial listing and $8,000 less than my estimated valuation. Pardon me while I go run a celebration lap...

Monday, March 03, 2008

DC Sales: 2007

Now that 2007 is behind us and 2008 is off to a scary start, I thought I'd provided a summary of full value residential sales the District recorded in 2007, compared to 2006. 2007 highlights:

  • Condos comprised more than half of all units sold in the District.
  • Average and median sales prices rose for all categories of single family homes and were flat/negative for condos.
  • Sales volume fell for every housing category.
  • Dollar volume fell across the board.

Mapped sales data can be be viewed below.


View Larger Map

State of the Market

The District recorded 7390 residential sales in 2007, 12.33% less than 2006. Dollar volume fell, too.

Ward 3 had a strong year with steep increases in average and median sales price. Ward 7 followed closely with positive price growth despite falling sales volume. The remaining wards had slightly positive or negative price gains. Only Ward 6 had positive growth in sales volume.

Condo sales dominated Wards 1-3 and 8. In no other instance did any type of housing represent more than 50% of sales in any ward.

Distribution of Sales

The chart below shows the distribution of sales recorded in the District in 2007, by sales price.

Almost 40% of units sold cost $350,000 or less.

Changes in the Market YoY

In the aggregate, average prices were up 4.27% while median prices were essentially flat. Sales volume fell 12.33%; condos fell 9.78% and homes declined 15.21%.

Condos

The number of condos sold [existing and new] fell 9.78% YoY, from 4470 to 4033. Average prices rose 0.29% and median prices fell 1.46%. Dollar volume fell 9.51%.

Single Family Homes

Overall demand for single family housing was down 15.21%. Average prices increased 8.75% and median prices grew 5.01%. All categories of houses had declining sales volume. Dollar volume fell 7.79%. Prices rise while fewer homes sell. Ward 3 has the honor of having the highest average and median prices in the District.

Purchase the Data

You can purchase the listing of 2007 home and condo sales recorded in the District for $75.00. Information in the listing includes [see below]:

  • Address
  • Sale price and sale date
  • Unit number [if a condo and if available]
  • Price per square foot
  • Square footage
  • The number of bedrooms and baths for each unit


Note:
I use the District's downloadable data, which usually has a 6-12 month lag, meaning that the data doesn't include condos or homes completed within the past year. Data may not be available for all properties. My analysis is dependent upon the completeness and fidelity of the District's appraisal data. This particular listing, in PDF format, has 361 pages; the file is about 3MB in size.

Full Year 2007 Sales ListingsAdd to Cart


Detailed Data

Aggregate by Zip Code

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

Aggregate by Ward

Full year 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.
  • My analysis is based on District sales and appraisal data that I've collected and processed. I've deleted those sales that appear to be of questionable data quality. Errors are always possible.
  • My analysis is limited to condos and single family homes; I omit properties the District classifies as multifamily conversions. I'm sure I'm excluding some properties that are legitimate single family homes, but I want to eliminate uncertainty.