D.C. Condos Are Selling At Prices Not Seen In A Decade
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In all four quadrants of the District, condos are selling at prices not seen in a decade. An increase in high-end offerings, combined with the growing attractiveness of living in the city and millennials beginning to buy homes, has driven condo prices up in many D.C. neighborhoods.
Now, developers building condos are completing building sales well ahead of schedule and are being rewarded with price tags significantly higher than what they expected.
The Wharf's 112-unit luxury condo building, Vio, is already 70% pre-sold ahead of its October opening. PN Hoffman CEO Monty Hoffman said it is on track to reach 90% by the building's completion, well ahead of the 60% the developer initially projected.
The water-facing units are selling at top-of-market prices between $1,300 and $1,400 per SF. The most expensive unit sold was a three-bedroom that went for just under $4M, Hoffman said. Hoffman said the prices and pace with which these units are selling are above what he first expected.
"The more expensive ones are actually going very quick, because those are facing the water and they’re just precious units," Hoffman said. "There are just no other condominiums available like them with water views."
The Wharf is helping boost property values throughout the Southwest neighborhood, Hoffman said. The median sale price in Southwest D.C. was $362K in April, up 17% year-over-year, according to a market report from residential brokerage Long & Foster. Throughout D.C., Hoffman said the condo market is the strongest he has seen it since the Great Recession.
"Interest rates remain low and people are regaining confidence," Hoffman said. "Also there have not been a lot of condominiums developed over the last eight years or so. There is not a lot of product out there."
As the condo market has improved throughout the city, the Northeast, Southeast and Southwest quadrants have caught up to Northwest in terms of pricing, Urban Pace president Matt Dewey said. Up until last year, having NW on an address would automatically create a premium of up to $75/SF, Dewey said, but that has disappeared.
"Whether it's a first-time homebuyer or a luxury buyer, they’re really open to all four quadrants of D.C.," Dewey said. "Historically, they would typically just stay within Northwest D.C. and within Georgetown."
The median sale price in the Northeast Capitol Hill neighborhood was $625K in April, up 8% year-over-year, according to Long & Foster. In Brookland and Deanwood, two other Northeast D.C. neighbors, prices were up 8% and 9%, respectively.
Urban Pace recently sold the highest-priced condo in Northeast D.C. since 2008 when it got $1.5M for the penthouse unit in The Sanctuary, a conversion of a historic Capitol Hill church at 819 D St. NE.
The building, developed by The Rubin Group and Regua, has already sold 28 of its 30 units, a much faster pace than Dewey expected.
"We were surprised by how many people in the market were actually seeking out unusual, unique properties with character," Dewey said. "We really wanted to push the pricing because it was a once-in-a-lifetime opportunity. We absolutely exceeded the market on the pricing."
Northwest condos may be losing their inherent premium, but they too are selling at near-record prices. A penthouse unit at JBG's Wardman Tower reportedly sold for $8.4M, the second-highest condo sale in the District's history. These penthouse units take up an entire wing on the seventh and eighth floors, up to 4,600 SF, in the historic building JBG restored. As of April, McWilliams Ballard's Miriam Fernandez, the building's sales representative, had sold 14 of the 32 units.
In the West End, sales have begun at 2501 M St. NW, the office-to-condo conversion with famous Japanese restaurant Nobu opening on the ground floor. Nine of the building's 59 residences are under contract after four weeks, with prices exceeding $1,400/SF, a spokesperson said. The priciest unit thus far, a 2K SF two-bedroom with a den, is selling for $3M.
Overall sales activity throughout the District was up 13.6% in the first quarter of this year, according to Delta Associates' Q1 condominium market report. Prices were up 0.9% metrowide, but rose by as much as 10% in some D.C. submarkets, the report showed.
Delta Associates senior associate Jonathan Chambers said he sees condo demand rising across the D.C. market because of overall economic growth and lifestyle changes, such as millennials deciding to buy a home and empty nesters wanting to downsize and move into the city. Demand is especially high for multimillion-dollar condos like the ones sold at Vio, The Sanctuary, Wardman Tower and 2501 M, Chambers said.
"I would say demand is going to continue to increase for higher-end units," Chambers said. "You’re starting to see development of higher-end units pick up over the last year or so, which points to more growth in that segment of the market."