Sales activity continued to shift away from the District and into the suburbs this quarter, due to buyer preferences for larger units in the wake of the COVID-19 pandemic. The number of available units in the metro area increased over the fourth quarter of 2020 and over the year. Prices decreased in most of the close-in Northern Virginia suburbs while they increased in the District and Bethesda. An influx of new inventory is being introduced to the market now and will continue to do so going into 2021. We continue to expect moderate sales growth as we go into the new year.

The fourth quarter of 2020 brought a total of 55 new condominium contract sales in the District and 408 units sold over the past 12 months – nearly one-fourth less than that of last year. Capitol Hill/Riverfront/SW submarket continues to lead sales although the number of contract sales declined over the year. Arlington recorded a 2.4% increase in sales while Alexandria had an 83.8% growth compared to 2019. New condo sales activity in Tysons is holding steady at 13.6% growth year-over-year. Similar to Alexandria, Bethesda is also experiencing a record amount of sales growth over the year.

After a more than five-year absence, new condo sales activity returned to Tysons in 2018 with the opening of Verse followed by Monarch. Sales have also now begun at The Bexley, bringing a total of 23 sales between the three properties in Tysons this quarter. Bethesda recorded five contract sales this quarter, and there have been 36 sales in 2020.

Average monthly sales pace in the District during the fourth quarter was 1.8 sales per project per month, same as third quarter. The Capitol Hill/Riverfront/SW submarket again had the fastest sales pace in the District at 3.4 sales per project per month, which is significantly higher than the pace from a year ago. Although this is the highest in the District, it is still a decrease over the year as with every submarket in the District except for Northeast. Sales pace also decreased in all three inner-NoVA submarkets as well as in Bethesda.

Average effective same-store prices of new condominiums in the District reached $799 per SF in the fourth quarter of 2020. This is up 2.6% from a year ago. Prices in District submarkets increased most in the Capitol Hill/Riverfront/SW submarket at 6.3% over the year. Like the Capitol Hill submarket, Arlington recorded an increase of 6.3% over the year. An increase of 5.3% was recorded in Bethesda while prices in Alexandria and Tysons decreased by 2.7% and 2.5%, respectively.

A total of 1,075 condominium units are currently marketing or under construction in the District, led by the NoMa/H Street submarket. In the close-in suburbs of Northern Virginia, there are 532 units actively marketing or under construction and 69 units in Bethesda. The 779 units in the District’s 36-

month development pipeline are mostly located in the River East submarket as well as the Upper Georgia Avenue submarket. Northern Virginia’s close-in suburbs currently have no projects planned over the next 36 months while 19 units are planned in Bethesda.

The inventory-to-sales ratio (months of supply at current rates of sale) in the District is currently 16.1 months but varies greatly by submarket. Months of supply ranges from zero months in the Upper Northwest submarket to 102.0 months in the Columbia Heights/Shaw submarket. The close-in suburban submarkets range from 3.7 months in Bethesda to 60.3 months in Tysons. Almost all of Washington-area close-in submarkets are currently considered to be supply-constrained. We have found over the years that a healthy ratio is between 24 and 30 months of supply—in that range, prices tend to move up gradually. In contrast, the rule of thumb in the resale market is that six months of supply is considered a healthy ratio. The difference between the two ratios corresponds to the 18 to 24 months typically required to build a new condo project.

Resale activity increased for condominiums in all but two of the close-in Washington area submarkets. The District had an overall increase of 5.2% while Northern Virginia sales activity grew by 0.8%. Bethesda had an increase of 1.2%. The average number of days on the market for District resale condos was 31 days during the fourth quarter, a slight increase from last quarter’s average of 27 days. Market conditions were tightest in the Northeast submarket at an average of 25 days, while the average condo took 46 days to sell in the Central submarket. Average days on the market ranged in the close-in suburbs from 23 days in Alexandria to 44 days in Bethesda.

TTR Sotheby’s International Realty is a licensed real estate brokerage in Washington, D.C., Maryland, and Virginia.