The sluggish condominium market in the Baltimore metro area is likely to remain that way, as sales are expected to drop this year, primarily because of a lack of attractive new units.
Delta Associates, the research affiliate of real estate firm Transwestern, released its first-quarter report on the condo market Wednesday showing overall resales at the highest point since 2007. But it also found there are not enough new units to entice buyers.
“In the Baltimore metro area there has been limited new development, especially in the city and near suburbs,” said William Rich, a senior vice president with Delta Associates. “That’s been the case for a few years, and as a result most of the supply that’s currently on the market is older product that has been sitting on the market for several years.”
He said when a unit remains on the market for a protracted amount of time it generally means it has issues with design, such as an unimpressive view or an inefficient layout. In the first quarter of 2014, there were only 22 sales of new condo units in the market. In the past 12 months, there were 210 sales of new units.
According to the report, the average new unit in the area has been on the market for more than seven years, and only four developments, all located in the southern suburbs, started marketing after 2010.
And there aren’t many new developments expected to come online in the near future. There are 266 units planned with probable sales in the next 36 months, and there are 5,200 multifamily units planned in the area that could be built as condos or apartments.
“I think in the Baltimore market most of the activity you will see will be in the resale market for the time being. The amount of development cost that it takes to build a new condo versus what pricing you can get for those units is almost cost-prohibitive,” Rich said.
In contrast, condo resale activities have shown an uptick.
In 2012 there were about 2,700 resales. That number rose to around 3,000 units last year, an increase of about 11 percent. Resale prices are up 6.7 percent from last year, compared to single-family home sale prices that increased 1.7 percent in the same time period.
“There is some job growth occurring in the Baltimore metro area, which would lead itself toward sustained condo sales activity,” Rich said.