The panelists all agreed that the condominium market had changed significantly from just one year ago, when every community was selling their product immediately. Today, supply is up, and buyers lack the sense of urgency felt previously. People are coming back to view a property three or four times before purchasing, and only one out of every ten to 12 people is closing. There are fewer investors in the mix as well. Investors comprise 20 to 25 percent of the market, down from 40 percent during the last several years. These dynamics do not indicate a poor market but one that is moving toward normal equilibrium.

While concessions were still offered in many communities at the end of 2005, incentives are now waning as spring approaches. Nevertheless, more aggressive advertising is taking place, which can take the form of re-branding a project that has failed to do well previously. The experts believe market supply will remain stable or decrease in the coming months and that the two-year pipeline will be absorbed, albeit in an increasingly competitive marketplace. While many projects are in for site plan approval, more pressure is on those currently going through schematic design.

Condominiums will continue to house larger, high-end units on the upper floors, with more affordable, smaller housing on the lower. In general, buyers expect more out of their product because many apartments offer a broad range of amenities. But unlike in previous years, a growing number of purchasers are willing to sacrifice space for greater conveniences, such as access to public transportation, restaurants and retail venues, particularly a grocery store, pushing prices up $50 to $100 per square foot. Moreover, increasing land values have created more modest designs in order to meet overall project costs.

Varying demographics throughout Washington, DC, have resulted in relatively diverse residential submarkets. For example, Baby Boomers are drawn to the Pennsylvania Quarter, which is considered one of the city's “safer” neighborhoods, whereas Southeast is drawing a more youthful set. A plethora of wealth is being transferred down through the generations. Consequently, first-time buyers are creating healthy demand. And if interest rates increase, there will be some market compression that will drive entry-level condominium demand even higher.

Outside the Capital Beltway, urban centers are performing well, as pricing is more affordable. The average cost of new condominium construction may be in the low to mid $300 per square foot, whereas construction in the District commands $500 to $600 per square foot. As redevelopment takes place in the close-in suburb of Rosslyn, Virginia, some may be surprised that prices could exceed over $1,000 per square foot for new product.

The market is coming into the busiest time of the year, with March as the pinnacle of activity. The experts indicated that the pace set between now and June 1 st will establish the tone for the market through the remainder of 2006, and we are all anxiously awaiting the results.