McWilliams & Ballard - 2014 Mid-Year Condominium Market Overview

Condominium Market Overview

2014

MID - YEAR

WASHINGTON METRO AREA

2

Condominium Market Overview . 2014 Mid-Year Report

3

contents 5 Introduction 7

Key Figures

9

New Condominium Market Overview

15 Pipeline 17

Overall Sales Activity

19 Resales 23

Distressed Sales

Market by Market: 25

The District

26 Arlington 27 Alexandria 28 Fairfax 29 Loudoun 30

Prince William

31 Montgomery 32

Prince George’s

4

Condominium Market Overview . 2014 Mid-Year Report

INTRODUCTION 5

M

id-Year 2014 finds much of the Washington Metropolitan Area’s condominium market in the midst of a supply-driven decline in new sales. The District, showing a 35% increase in new sales relative to the same period in 2013, is exceptional in that all other jurisdictions were either flat or showed slight declines over the previous year.

The District has long been undersupplied, with resale pricing and quantity exceeding peak levels and only a handful of projects of significant size entering the market. It is then not surprising to see new, delivered product in small projects quickly absorbed. As new, larger-scale projects currently preselling begin to deliver, the pace of new sales in the District will only increase.

In the remaining jurisdictions, new sales were slowed by a lack of available product. Suburban townhome-style product, still capturing over half of new sales, is disappearing as several projects in suburban jurisdictions like Montgomery and Loudoun sell out or reach their final units. Arlington continues to be the most acutely undersupplied, with effectively only one project contributing sales in the first half of 2014. If and when significant new condominium supply reaches the suburbs, these jurisdictions will likely see the increases in number of new sales now occurring in the District.

The development pipeline throughout the metro area is heavy with large residential projects, most with too many units to develop as condo. The question of how many units is too many only comes into play when developers decide to forego the strong market for multifamily among institutional investors, which is yielding record high per-unit prices and continued low capitalization rates.

Following several periods of increases in both quantity of sales and average pricing, it is not overly concerning to see the number of resales decline slightly relative to Mid-Year 2013. First, the number of sales have been increasing since Mid-Year 2011 and have increased an average of 3% annually since then.

Second, average resale pricing increased a further 4% over the Mid-Year 2013 figure with only a slight increase in average days on market. Lastly, to date, 2014 includes an abnormally slow first quarter influenced by the long winter.

A market defined by low supply and supercharged resale prices provides many opportunities for well-designed and executed projects to succeed.

Submarkets such as Shaw and the U Street Corridor, H Street and the RosslynBallston Corridor have become increasingly desirable places to live while delivering no new condominium product. Condominiums built in the last cycle are now more than five years old and yet are selling at increasingly high prices. These factors signal unmet demand for new product.

6

Condominium Market Overview . 2014 Mid-Year Report

key figures

7

MY 2014 NEW CONDO SALES

1,428

% CHANGE FROM MY 2013

-14% (1,658)

% CHANGE FROM MY 2011

+38% (1,037)

% OF NEW CONDO SALES TH STYLE ARLINGTON (LOWEST) PRINCE WILLIAM (HIGHEST) YEARS OF SUPPLY

53% 0% 100% 0.9

DISTRICT (LOWEST)

0.4

PRINCE GEORGE’S (HIGHEST)

7.2

NEAR-TERM MULTIFAMILY PIPELINE MAXIMUM POTENTIAL CONDO AVG RESALE PRICE

63,722 6,956 (11%) $326,135

% CHANGE FROM 2013

+3.7%

% CHANGE FROM 2011

+28%

AVG RESALE QTY

6,383

% CHANGE FROM 2013

-0.5%

% CHANGE FROM 2011

+8.8%

AVG RESALE DOM

41 days

% CHANGE FROM 2013

+2 days

% CHANGE FROM 2011

-31 days

PRIME SUBMARKET PSF

$510 psf

OVERALL % CHG FROM 2013

+7.6%

BETHESDA (HIGHEST PSF INCREASE)

+18%

OLD TOWN (LOWEST PSF INCREASE)

-1%

8

Condominium Market Overview . 2014 Mid-Year Report

new condominium market overview Mid-Year 2014 finds the Washington Metro Area’s new sales market essentially flat compared with last year. While new, small conversions and presales at larger projects are driving an increase in the District, most of the region is demonstrating its lack of supply with declining new sales. Large suburban townhome-style condominium projects, while still contributing the majority of sales in the region, are in many cases nearing the end of their inventory and thus contributing fewer sales over this period.

13,350

Examples of this are recently sold out projects such as Overlook at Lowes Island, Arora Hills and the 2-over-2 component of Pulte’s Metrowest development.

Of the 705 units in projects starting contract sales in 2014, 56% were sold by Mid-Year.

These new projects included a few large—by 2014-standards—projects such as Ontario17 and 460 New York Avenue, but overall projects are averaging just 9 units. As they tend to be

yearly new condo sales

9,100

5,700

running average = 5,173

4,785

4,400

2,176

2,645

2004

2005

2006

2007

2008

2009

2,942

2,850

2012

2013

*2014

2,039

1,875

2003

2,777

2010

2011

*annualized

9

1st half 2014 sales & inventory by product type

684 mutifamily style

47%

53%

761 townhome style

1st half 2014 sales

897 mutifamily style

34% 66%

1,727 townhome style

remaining inventory

10

Condominium Market Overview . 2014 Mid-Year Report

small, many of these projects do not linger on the market and thus do not contribute to overall inventory. Of the 78 projects starting sales, 33 were sold out by Mid-Year.

Townhome-style product continues to command the majority of sales and is the dominant type of condominium sold in the outer jurisdictions.

As recently as 2011, one-level multifamily condominiums commanded 70% of new sales.

The introduction of new multifamily product in the District in the latter half of 2014 and through

11

2015, plus Arc3409 in Arlington appears likely to swing the balance back toward multifamily-style units. The District, Arlington and Alexandria have higher shares of multifamily-style condominium units in their sales, with Pulte’s Potomac Yard the only large townhome project actively selling in the close-in jurisdictions.

At present, the overall new sales and inventory picture remains heavily influenced by suburban townhome projects. The District’s 35% increase in new sales over Mid-Year 2013 tempers the

decline overall in the metro area. The District’s sales were particularly impressive given that only one new condominium project over 50 units was selling as a delivered project at Mid-Year 2014.

Overall inventory declined 13% from Mid-Year 2013. Based on the sales pace at Mid-Year 2014, the metro area’s new condominium inventory stands at .9 years of supply, a decline of half a year from 2013. The District, which saw many of its sales occur in small projects that are now either sold out or contributing little inventory, now has fewer than 5 months of supply on

the market. Alexandria’s remaining units are principally located within Pulte’s Potomac Yard project, contributing only a year of supply. Only Prince Georges County, which saw an influx of inventory with the start of sales at Greenbelt Station, has more than two years of inventory at Mid-Year. Overall remaining supply outside the District is isolated to a handful of projects, with each jurisdiction drastically under-supplied for many product types.

remaining inventory

18,852

11,959

7,688 6,200 5,383 4,204 3,542 3,033 2,911 2,624

mid-2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

12

Condominium Market Overview . 2014 Mid-Year Report

1,426

total 1st half 2014 new sales

-14%

year over year change in 1H new sales

New Sales by Jurisdiction

13

Jurisdiction

1H 2014 Sales

2013 Δ%

% of Metro Sales

% of SingleFloor Condo

The District Arlington Alexandria Fairfax Loudoun Prince William Montgomery Prince George’s

504 14 79 106 261 280 172 9

35% -82% -9% -12% -42% 11% -27% -85%

35% 1% 6% 7% 18% 20% 12% 1%

89% 100% 39% 63% 26% 0% 22% 11%

2,624

remaining new inventory for sale

0.9

metro-area years of supply

Remaining Inventory by Jurisdiction Jurisdiction

Inventory

% of Metro Supply

Years of Supply

The District Arlington Alexandria Fairfax Loudoun Prince William Montgomery Prince Georges

376 52 160 216 610 704 377 129

14% 2% 6% 8% 23% 27% 14% 5%

0.4 1.9 1.0 1.0 1.2 1.3 1.1 7.2

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Condominium Market Overview . 2014 Mid-Year Report

pipeline All Near-Term Multifamily (for Sale & Rental) total

63,722

u/c +

32,455

planned

31,267

# projects 359

Of the more than 63,000 units in 359 projects under construction or planned to begin construction within two years, only 10% are expected to deliver as for sale condominiums.

At the running average rate of new sales since 2003, the number of expected condo units will be absorbed in 1.2 years. Additionally, six planned projects with 825 units are currently programmed as rental but may change to condominium.

The District remains by far the largest contributor to the multifamily pipeline. The rapid pace of development in eastern areas of the city, including Shaw, NoMA and H St NE, as well as a recent surge in new development in Upper Northwest all conspire to give the District that distinction. Fairfax County remains a somewhat distant second, as phasing for several massive plans in Tysons and Reston begins to crystallize.

New projects in Bethesda, along Rockville Pike and Wheaton bring Montgomery close behind.

There are several reasons why so few projects are planned as condominium in a chronically under-supplied market. One is the typical size of planned projects; of the 188 planned projects expected to deliver as rental, 71% will contain

15

Planned for Sale Condominium max potential units

known units

6,956

6,131

200 units or more. Projects of this size present difficulties in meeting presale requirements for government-backed end loan financing. Demand for apartment assets by long-term holders remains strong with cap rates remaining low and big sales such as that of the Woodley Wardman making headlines with per unit sales pricing exceeding $900,000 per unit.

A few completed rental projects are expected to take advantage of the improving condominium market by converting. This is less likely in the District due to TOPA laws, and conversions of large- projects elsewhere are hampered by the same end-loan financing constraints as new developments.

For these reasons, there is little concern in the current environment about condominium oversupply in the near term. It is likely that some projects will not deliver as currently planned due to the limits of project financing and/or expected demand. The pipeline is constantly evolving and the determination of each project’s status is based on statements made by developers or public news sources as well as information gathered by McWilliams|Ballard.

All Near-Term Multifamily (For Sale & Rental) Jurisdiction

Total =

Under Construction

Planned

# Projects

The District Arlington Alexandria Fairfax Loudoun Prince William Montgomery Prince Georges

19,186 6,307 6418 12,358 1,719 2,260 12,261 3,213

10,390 2,724 3,698 4,511 1,384 1,902 5,515 2,331

8,796 3,583 2,720 7,847 335 358 6,746 882

179 29 22 38 11 19 49 12

Planned* for Sale Multifamily Jurisdiction

Known Units

%

Max Potential Units

%

The District Arlington Alexandria Fairfax Loudoun Prince William Montgomery Prince Georges

2,632 589 235 821 263 430 741 420

14% 9% 4% 7% 15% 19% 6% 13%

2,767 729 418 941 263 430 988 420

14% 12% 7% 8% 15% 19% 8% 13%

*projects not yet selling

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Condominium Market Overview . 2014 Mid-Year Report

overall sales Overall sales activity saw a modest 3% decline at Mid-Year 2014. This comes after a 14% surge in total sales activity over the same period in 2013.

The decline can be attributed to lack of supply in both new and resale markets as well as a long winter season affecting first quarter sales more than is typical. Resale volume was essentially flat overall, with new sales increasing only in the District and Prince William County. Currently resales comprise 82% shares of total sales, which is a slight increase over 2013, but new supply is likely to drive that number downward through the cycle, closer to its 2005 resale share of only 57%.

The decline in overall sale activity is therefore a combination of a supply-driven decline in new sales with resales perhaps testing their upper limits under current market conditions. With the introduction of new supply in highly desirable submarkets over the next 36 months, new sales are expected to comprise a greater share of overall sales activity, driving an increase in total sales. For now, however, trends in resale pricing and days on market remain vital to understanding condominium demand.

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The average resale price climbed 3.7% over MidYear 2013, making 2014 the third consecutive Mid-Year period with an increase in average price.

The first and second quarters essentially mirrored the same quarters in 2013 in number of sales, with both periods showing increases in pricing.

The increase in average price was nearly across the board, with Arlington the only jurisdiction showing a very slight decline in average price.

Average days on market remained nearly flat at 41 days, a slight increase over Mid-Year 2013.

This follows two periods of severe declines from 72 days in 2011. The Mid-Year 2014 average is also nine fewer days than the average observed at the peak of the resale market in 2006. This figure, possibly more than total number sold, is affected by external factors such as poor weather conditions experienced in the first quarter. That the number remains well below levels since the beginning of the current cycle and indicates condominium demand is healthy.

total sales activity new sales

resales

total

5,516

2009

5,560

2010

5,838

1,417

7,255

2011

5,867

1,037

6,904

2012

4,834

2013

6,418

1,658

8,076

2014

6,383

1,428

7,811

956

5,862

1,028

mid-year 2014 resales district

1,588

arlington

675

alexandria

540

fairfax

1,370

loudoun

318

prince william

355

montgomery

1,056

prince georges

481

new sales 504

5,516 7,255

14

6,904

79 106

5,862 5,862

261

5,862

280 172 9

total

8,076 7,811

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Condominium Market Overview . 2014 Mid-Year Report

25%

district

7%

prince georges

17%

montgomery

11%

arlington

6%

prince william 5% loudoun

8%

alexandria

21%

mid-year 2014 total resales quantity

fairfax

resales Nearly half of the overall number of resales occurred in the District and Fairfax. These jurisdictions, as expected, sold very different product, with the average size of units resold in the District at 931 square feet and Fairfax units averaging 1,135 square feet. The District also commands an average resale price per square

19

foot nearly double that of Fairfax. The third largest contributor of resales is Montgomery County, with its broad mix of product types throughout the county coming to an overall average size of 1,241 square feet and $236 per square foot.

quarterly resale volume vs. average price average price 4,000

3,897

3,872 3,709

3,500

3,357 3,046

3,023 3,000

2,823 2,689

2,575

2,546

2,500

2,486 2,281

2,000

1,477

1,500

1,267 1,000 q1

q2

q3

2011

q4

q1

q2

q3

2012

q4

q1

q2

q3

2013

q4

q1

q2

2014

20

Condominium Market Overview . 2014 Mid-Year Report

Montgomery’s Bethesda and Chevy Chase submarkets commanded the second highest average prices, next to the Downtown DC submarket, which includes both Penn Quarter and much of the Logan Circle neighborhood. The 17 ZIP codes considered “prime” for this analysis comprised 29% of the overall resale market with a 54% price per square foot premium relative to the other ZIP codes. The prime submarkets saw a 7.6% overall increase in average prices per square foot over Mid-Year 2013 to $510 per square foot. This increase is notable given that the existing product continues to age. Resales in projects such as Logan Circle’s Cooper Lewis

Lofts and 22 West in the West End are seeing resales exceed $1,000 per square foot on product now 6 to 7 years old. New product delivering into these and other prime submarkets promises to achieve even higher pricing as buyers of luxury product will finally have the option of purchasing new construction again.

At Mid-Year 2014, there were 2,772 active units on the resale market. While this represents an increase from Mid-Year 2013, when 1,780 units were available, the active resale units represent fewer than six months of supply at the current resale pace.

mid-year resale volume & price % change -21.3%

2006

-12.4% -30.7%

1.9% 2.3%

2007 2008

-7.6% -17.4%

19.5%

2009 2010

-4.7%

2011

-17.6%

5%

5.8%

0.5% 16.7%

2012 2013

-0.5%

21

SALE Δ % PRICE Δ %

2014

5.5% 3.7%

32.8%

georgetown old town & upper nw

588,145

531,849

542,387

480,858 downtown dc

mt vernon sq & shaw

bethesda & chevy chase

dupont circle

&

foggy bottom

dc

arlington

alexandria

montgomery

fairfax

loudoun

prince william

95,605

85,133

209,436

188,122

257,239

229,447

281,975

274,178

292,297

277,437

average mid-year resale price 2013 & 2014 by jurisdiction 2013 2014

329,879

320,039

adams morgan & col hghts

491,723

503,114

578,750

526,991

488,439 469,268

483,477

485,305

479,518

479,169

412,015

459,130

corridor

411,640

RB

capitol hill

446,367

466,046

384,142

375,979

494,611

average resale price mid-year 2013 & 2014 - prime submarkets 2013 2014

prince georges

22

Condominium Market Overview . 2014 Mid-Year Report

market rate, foreclosures and short sales by jurisdiction

montgomery

81% 11% 8%

94% 4% 2%

loudoun

97% 1% 1% 91% 4% 5%

85% 7% 8%

prince william

fairfax

arlington

dc

alexandria

97% 1% 3%

prince georges

44% 25% 31%

91% 4% 4%

market ss reo

distressed sales The distressed share of the resales market continues to shrink, falling to just 12.2% after capturing 17.8% at Mid-Year 2013. This smaller number of distressed sales is split roughly evenly between short sales and resales, with short sales maintaining a slim majority. These figures indicate a drastic change over the past few years in the composition of the resale market. As recently as Mid-Year 2011, distressed sales comprised 40.6% of all resales. At that time, nearly 10% of all sales in Arlington were distressed, 15% in the District and nearly half of all sales in Loudoun.

At Mid-Year 2014, distressed sales are nearly non-existent in the District and Arlington and

23

comprise only 6% of sales in Loudoun. Even Prince George’s, long plagued by a severe foreclosure problem, decreased its share of distressed sales to 56% from 69% at Mid-Year 2013 and 74% at Mid-Year 2011.

The continued decline in foreclosures and short sales in the market has contributed to improve overall pricing, with market sales a 127% price premium over distressed sales. Once a grave concern for the condominium market, distressed sales and inventory are nearly gone in the closein jurisdictions and are having a diminishing impact overall.

82+12+6= 88+7+6=

mid-year resales foreclosures and short sales 2013 6.0% 11.8%

82.2%

5.7% 6.5% 87.8%

2014

foreclosure short sale market

24

Condominium Market Overview . 2014 Mid-Year Report

THE DISTRICT NEW CONDOMINIUM SUBMARKET HIGHLIGHTS • The District’s number of new condominium sales have increased 35% in so far 2014, with presales at larger projects and new, small conversions driving an increase in sales. Smaller projects have sold out quickly, preventing the accumulation of inventory, as fewer than 5 months of new supply are now on the market.

• The District’s sales were particularly impressive given that only one new condominium project over 50 units was selling as a delivered project at Mid-Year 2014. Sales are expected to remain strong in the second half of 2014 as larger projects currently preselling deliver and additional projects begin presales in the fall.

• More than 10,390 multifamily units are currently under construction with another 8,796 planned in the near term. However, only 14% of the more than 19,000 units under construction or planned are expected to be condominiums for sale.

dom 2014 40 2013 49

compared -9 days

peak

compared -12 days

52

qty 2014 1588 2013 1588

compared

peak

compared

1331

0%

+19%

RESALE SUBMARKET HIGHLIGHTS & CHART • Average resale prices rose a further 3% in 2014, continuing a 36-month trend of consistent increases. The District’s average price well exceeds those of all other jurisdictions, an 11% premium to Arlington and a 40% premium to the Metro Area as a whole.

The District and Arlington share the distinction of being the only jurisdictions to have surpassed their peak average prices and prices per square foot.

• Resale days on market fell 9 days from Mid-Year 2013 to an average of 40 days. This further illustrates the strong demand in the District as even higher priced resales sell faster than the previous period and 12 fewer days than the average observed at the peak of the resale market in 2006.

25

avg psf 2014 499 2013 462

compared

peak

compared

449

+8%

+10%

ARLINGTON NEW CONDOMINIUM SUBMARKET HIGHLIGHTS • New condominium sales in Arlington have declined 82% over Mid-Year 2013, largely due to the severe lack of new supply in the market. The introduction of new product at Arc3409 and Columbia Place is very likely to cause new sales in Arlington to meet or exceed 2013’s new sales figure by year’s end.

• Arlington’s pipeline includes 6,307 units under construction or planned in the near term. Of those a maximum of 12% may be for-sale condominium. With a drastic lack of supply at Mid-Year 2014, the market appears to be ready to absorb this new inventory.

RESALE SUBMARKET HIGHLIGHTS & CHART • The number of resales has declined slightly due to a slow first quarter that was likely impacted by the weather. The number of resales in the second quarter increased 45% over the same period in 2013.

• At Mid-Year 2014, Arlington’s average resale price is 5% higher than the price observed at the resale market peak in 2006. Arlington and the District share the distinction of being the only jurisdictions with average resale price now exceeding peak average prices.

• Behind Loudoun’s average by just one day, Arlington boasts the second lowest average days on market in all the metro area’s jurisdictions. The Mid-Year 2014 average of 34 days is 17 fewer days than the average observed at the peak of the market in 2006.

dom 2014 34 2013 28

compared +6 days

peak

compared -17 days

51

qty 2014 675 2013 709

compared

peak

compared

711

-5% -5%

avg psf 2014 401 2013 391

compared

peak

compared

377

+2%

+6%

26

Condominium Market Overview . 2014 Mid-Year Report

ALEXANDRIA NEW CONDOMINIUM SUBMARKET HIGHLIGHTS • New sales saw a slight decline relative to Mid-Year 2013, as most active projects sold out or reached their final handful of units.

The great majority of remaining inventory is in townhome-style condominiums at Pulte’s Potomac Yards project. Only two projects, the Oronoco and the Henry, contain all the remaining one-level condominium inventory, fewer than 20 units overall.

dom 2014 51 2013 40

compared +11 days

peak

compared -10 days

61

qty

• Alexandria’s near-term pipeline consists of 11 projects, totaling 6,418 units. Of the 11 projects, only four are expected to be for-sale condominiums, representing, at most, 7% of total planned units.

2014 540

RESALE SUBMARKET HIGHLIGHTS & CHART

2013 538

compared

peak

compared

• Average resale prices climbed a further 3% relative to Mid-Year 2013, with roughly the same number of sales. Resale prices have been steadily increasing since 2011, with the Mid-Year 2014 average price 26% higher than the average observed at Mid-Year 2011, though still 7% below the 2006 peak market figure.

• The continued increase in prices and slow first quarter contributed to an increase in average days on market, though the number remains 10 days below the average at the 2006 resale market peak.

613

0%

-13%

avg psf 2014 293 2013 289

compared

peak

compared

345

27

+1%

-16%

FAIRFAX NEW CONDOMINIUM SUBMARKET HIGHLIGHTS • The number of new sales in Fairfax declined somewhat is on pace to match last year’s figure by the end of 2014.

• A 63% majority of new sales have been of one-level condos, just one sign of the county’s continued urbanization. These sales occurred at The Isabella at Monticello Mews—just west of Alexandria’s city limits—and The Flats at MetroWest, near the Vienna Metrorail station.

dom 2014 36 2013 26

compared +10 days

peak

compared -19 days

55

qty 2014 1370

• With over 12,358 multifamily units under construction or planned in the near term, Fairfax is set to continue to add significant multifamily product at Tysons, Reston and the Route 1 Corridor. Still, at most, 8% of these new units are anticipated to be for-sale condominiums.

2013 1400

compared

RESALE SUBMARKET HIGHLIGHTS & CHART

peak

compared

• Consistent with the overall trend in the metro area, the Fairfax resale market saw a nearly 3% increase in average price with the number essentially unchanged relative to Mid-Year 2013. However, similar to Alexandria and Loudoun, resale prices and number sold remain below averages observed at the peak.

• Fairfax is second only to the District in number of resales. Together, the two jurisdictions contribute nearly half of all resales in the metro area.

• Though experiencing an increase relative to Mid-Year 2013, Fairfax’s average days on market have declined 19 days since market the resale market peak in 2006.

1851

-2%

-30%

avg psf 2014 251 2013 240

compared

peak

compared

289

+%

-14%

28

Condominium Market Overview . 2014 Mid-Year Report

LOUDOUN NEW CONDOMINIUM SUBMARKET HIGHLIGHTS • New Condo Sales are projected to decline 42% over 2013. This decrease can be attributed to the fact that most of the townhomestyle product delivered since 2011 has now sold and little new inventory has arrived to replace it.

• While townhome-style projects dominate the new sales marketplace, 26% of new sales of the county’s new sales have been in multifamilystyle projects. New greenfield developments in the county are expected to include more one-level condominium components as projects such as Van Metre’s Centre Park at Stone Ridge and Toll Brothers’ Stratford Club demonstrate the viability of that product type.

• Four projects are planned for the near-term, yielding 263 condominium units in projects not yet under construction. Most of the county’s pipeline is comprised of large townhome projects currently selling while taking down and delivering units in phases.

RESALE SUBMARKET HIGHLIGHTS & CHART • Average resale prices increased 12% in 2014, the largest percentage increase of all jurisdictions. The number of resales has also increased in 2014, up 11% from Mid-Year 2013. This figure is still 12% short of the number of sales at the 2006 peak.

• With the sizable jump in average price came a slight increase in days on market, six days on average over Mid-Year 2013. This average remains far lower than the 65 day average observed in 2006.

dom 2014 33 2013 27

compared +6 days

peak

compared -32 days

65

qty 2014 318 2013 286

compared

peak

compared

359

-12%

avg psf 2014 183 2013 172

compared

peak

compared

252

29

+11%

+6%

-32%

PRINCE WILLIAM NEW CONDOMINIUM SUBMARKET HIGHLIGHTS

dom 2014 43 2013 29

compared +14 days

peak

compared -9 days

• New condominium sales in Prince William County increased 11% in over Mid-Year 2013. This continues a trend of double digit increases in sales at Mid-Year periods beginning in 2012.

52

• With this healthy new sales pace, the county is far from being in danger of oversupply, as only 1.3 years of supply remain on the market.

qty

• The near term pipeline includes 430 units known to be condominium but not yet for sale, including those in forthcoming phases of existing townhome-style projects.

2014 355

RESALE SUBMARKET HIGHLIGHTS & CHART

2013 336

compared

• Average resale prices increased 11% over Mid-Year 2013, second only to Loudoun’s price increase in percentage terms. The number of resales made similar improvements, increasing 6% over 2013.

peak

compared

• Prince William’s average resale price remains 26% below its 2006 peak, 35% lower on a per square foot basis. This suggests the county has the capacity for further cyclical improvement in its pricing.

• As is also the case with Loudoun, Prince William’s increase in average resale prices and number sold have brought with them an increase in average days on market. Notably, Mid-Year 2014 average remains nine days below the 2006 resale market peak average.

399

+6%

-12%

avg psf 2014 141 2013 132

compared

peak

compared

217

+7%

-43%

30

Condominium Market Overview . 2014 Mid-Year Report

MONTGOMERY NEW CONDOMINIUM SUBMARKET HIGHLIGHTS • New condominium sales saw a 27% decline relative to Mid-Year 2013 as suburban townhome projects that were large contributors of sales in the prior period sold out or reached their final units.

Inventory has shown a 12% decrease since Year End 2013, falling to one and a half a years of supply.

• Townhome-style units still dominate sales over one-level units at Mid-Year 2014, representing 88% of new condo sales. More urbanstyle product currently selling in Downtown Bethesda will begin generating a higher number of sales as they approach delivery.

• There are an impressive 12,261 multifamily units under construction or planned in the near term, with several large residential and mixed-use projects planned throughout the county. However, just 6% of these units are currently planned as condominiums for sale, representing a maximum of 988 units.

dom 2014 47 2013 42

compared +5 days

peak

compared 0 days

47

qty 2014 1056 2013 1070

compared

peak

compared

1451

-1%

-32%

RESALE SUBMARKET HIGHLIGHTS & CHART • Average resale price improved 5% over 2013, with the number of sales showing a 1% decline. As is the case with other jurisdictions outside of the District and Arlington, prices and number sold still have yet to reach levels observed at the 2006 peak. The county now within 6% of peak pricing.

• A small increase in average days on market has accompanied the resale price increases. The county’s average days on market is now even with the resale market peak in 2006, at 47 days.

avg psf 2014 236 2013 225

compared

peak

compared

261

31

+5%

-10%

PRINCE GEORGES NEW CONDOMINIUM SUBMARKET HIGHLIGHTS

dom 2014 41 2013 65

compared -24 days

peak

compared +16 days

• While the county’s development pipeline is showing more new signs of life, most activity is in rental or fee simple projects. The near-term pipeline consists of about 3,213 units, 2,331 of which are currently under construction. Among the 3,213 units in the nearterm pipeline, 13% of are expected to be for-sale condominiums.

qty

• While still hampered by distressed sales and aging resale inventory, the improvements in the resale market point to strengthening demand for future new product in the county.

2014 481

RESALE SUBMARKET HIGHLIGHTS & CHART • The resale market in Prince Georges County is showing improvements as prices increased 11% while the number of sales follows the trend of rest of the metro area, with a slight decline of 2%. Prices remain well below the peak of the market.

• The county’s high proportion of distressed sales is likely to blame for its high days on market and low pricing relative to peak. The share of distressed sales continues to fall however, representing 56% of overall resales at Mid-Year 2014 and down from 60% at the same period in 2013.

25

2013 491

compared

peak

compared

970

-2%

-67%

avg psf 2014 85 2013 74

compared

peak

compared

160

+15% -61%

32

MCWILLIAMS | BALLARD 1029 North Royal Street Suite 301 Alexandria, VA 22314 P (703) 535-5550 F (703) 535-5551 E info@mcwilliamsballard.com W www.McWilliamsBallard.com