Washington, D.C., is considered one of the strongest, if not the strongest, housing market in the country. But three different reports show exactly how unevenly this relative prosperity is distributed throughout the nation’s capital.
Recently, in its third quarter 2009 Mid-Atlantic Condominium Market Report, Alexandria, Va.-based research firm Delta Associates says that Arlington/Alexandria and the District are below the metro average and are approaching levels considered “product shortage” for condos. Right now, there are 3.4 years worth of inventory on the market, totaling 7,128 unsold new condominium units.
“Those parts of the metro area have a sales inventory lower than the metro average and supply is starting to get tight in those areas,” says William Rich, a vice president at Delta.
Washington, D.C.-based research organization The Urban Institute countered with a report that’s a bit more sobering, though not entirely inconsistent with Delta’s findings. The report, titled “Housing in the Nation’s Capital 2009,” said that foreclosure rates in June were highest in Prince George’s County (5.2 percent), Charles County (3.9 percent), and Prince William County (3.7 percent). Not surprisingly, Alexandria and Arlington, at less than 1 percent, had the lowest foreclosure rates. “In some of the further out communities, foreclosures have started to play a larger role,” Rich says.
The Urban Institute’s one glimmer of hope in the report is that home sales in the first half of the year were 11 percent higher than a year ago. Delta expanded on that saying that in the third quarter, 686 units sold in the area, which was the highest total in two years. In the past 12 months, there were 2,120 sales, which is an increase of 45 percent from the prior 12-month period.
What all of this means is that different areas of the same region could need entirely different things. In those areas hardest hit by foreclosure, government intervention may be needed. “The foreclosure crisis is far from over, and the hardship is not distributed evenly across the region,” says Kathy Pettit, the report’s lead researcher in the report. “How well governments and service agencies coordinate their responses will influence the pace of the housing market recovery and determine the extent of long-term harm on our neighborhoods and families.”
But in Alexandria, Arlington, and some parts of the District, construction may be the cure. Unfortunately, there isn’t financing, which could mean condo conversions. “Conversions are a possibility in the District, Arlington, and Alexandria where the pipeline is starting to get tight,” Rich says. “You won’t see much in the way of new construction because there’s no financing to build right now.”
There’s a downside to conversion though, too. Sorely needed rental housing could be harder to come by. That’s already a huge issue according to a third major report, “Priced Out: Persistence of the Workforce Housing Gap in Washington, D.C.,” from the ULI Terwilliger Center and RCLCO/Robert Charles Lesser. The report says that despite the D.C. metro area’s high median income, there is currently a shortage of 40,000 housing units for workforce households. Losing rental supply to conversion, when homeowners are being foreclosed upon, won’t help this issue.