The second quarter of 2020 was the slowest new condo spring selling season in the Washington metro area since at least 2003, the first year Delta started tracking the condo market. Sales were expected to drop in the second quarter due to the COVID-19 shelter-in-place order enacted by the District of Columbia, Virginia, and Maryland. While this was the case in the District and Northern Virginia, sales activity in Suburban Maryland during the second quarter was similar to previous quarters. Suburban Maryland also had the sharpest increase in price growth, almost four times that of the District. Inventory remains tight in the metro area, as the number of available units was nearly unchanged from last quarter. We expect construction starts to slow in 2020 compared to previous years, so inventory will continue to be limited for the foreseeable future.

second QUARTER 2020 HIGHLIGHTS

Sales: Metro-wide there were 264 new unit sales during the second quarter of 2020, which is 26% less than the number of units sold during the first quarter of 2020. However, net sales over the past 12 months reached 1,571 units, which is up 26% from the prior 12-month period.

Prices: New sale prices increased over the 12-month period ending June 2020 by 2.4% metro-wide.

Concessions: Average concession rates (as a percentage of asking price) are at 0.4% as of the second quarter of 2020, down 20 basis points from a year prior.

Pipeline: Unsold units in projects currently marketing or under construction (and not yet marketing) number 3,089 units as of June 2020, slightly higher than a year ago. Currently, the submarkets with the largest available inventory are Capitol East DC (1,128 units), Arlington/Alexandria (500 units), and Mideast DC (356 units).

Starts: A total of 712 units are expected to start construction in 2020, which is below the 1,729 units that broke ground in 2019. Starts will be concentrated in the District, where all but four of the projects are located.

Deliveries: We expect the number of deliveries in 2020 to increase from 2019 (when 928 units delivered) to 1,622 units (excluding potential condo switches).

Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals which has been providing consulting and subscription data services to the commercial real estate industry for over 35 years.