Going Mondo Condo

Going Mondo Condo

Projects Flooding the Area With New Neighborhoods Could Dent Housing Prices

A dramatic transformation is underway in the Washington area as hundreds of new condominium projects move off the drawing boards and into people's lives.

More than 47,000 new condominiums, in 322 separate projects, are coming onto the market in the next three years, according to real estate information firm Delta Associates. Many of those buildings promise to create new kinds of neighborhoods in areas that were not previously known as residential communities. At the end of September, there were 18,872 new condominium units for sale in the region, many that introduce new choices to long-established places, up from only 3,083 in the same month two years earlier.

New urban-style high-rise and mid-rise condominiums are being built in Tysons Corner, Reston, Alexandria, Shirlington, Arlington, Rockville and Bethesda. New neighborhoods are being created in emerging housing nodes around the District, including the 14th Street corridor, Columbia Heights, the Chinatown area, near Pennsylvania Avenue NW downtown and the streets around the New York Avenue Metro station in Northeast Washington. Historic adaptations of vintage buildings are introducing new twists on old themes.

And on the lower end of the price scale, about 24 apartment complexes throughout the region have been purchased by developers in the past year for conversion to condominiums, many being marketed to the middle-income people who have been left out of the recent housing boom.

But while many people are applauding the burgeoning array of choices after several years in which the competition for housing left buyers feeling more like beggars, others are wondering whether too much condominium construction is underway -- and whether a glut is looming.

That could mean lower prices, a plus for buyers. But more new units can make it harder for owners of existing condos to sell. The number of existing, for-sale condos in Alexandria and Arlington, for example, has risen from as low as 41 units at various points to a recent high of 335 units for sale, said real estate agent Ginger Harden. These days, she watches with some alarm when new condos come on the market.

"Every time you turn and you see a sign 'Coming Soon,' my real concern is whether the market will get flooded," Harden said. "It can be too much of the same thing."

Others argue that in high-priced housing markets, condominiums are the only affordable option left for many buyers -- and that the market will thus remain strong. The explosion in condos in the Washington area is being mirrored in South Florida, California, Boston and New York, other places where the gap has grown between housing prices and the incomes earned by average workers.

"It's taking place in all the areas where single-family homes are becoming unaffordable for your average first-time or middle-income buyer," said Dan Fasulo, director of market analysis for Real Capital Analytics, a New York City real estate information firm. "Not that many people can afford a half-million-plus for a starter home."

Fasulo thinks demand may be weaker at the high end of the market, where fewer people can afford the units, while he has confidence that demand will remain high for condominiums that many people can actually purchase.

"Even plain-vanilla, nondescript units will be absorbed," he said. "I wonder about the luxury unit more."

So far, condo demand remains high. More than 10,100 new units have been sold in the first three quarters of 2005, more than the 9,100 sold in the region in all of 2004, according to Delta Associates.