Sales activity has remained steady over the past year despite a spike in the third quarter of 2019. This quarter, sales shifted towards the District unlike in recent quarters where activity was spread more evenly across the region. Similar to last quarter, Suburban Maryland has the sharpest annual price growth, almost six times that of Northern Virginia and the District. Inventory remains tight in the area and the number of available units has decreased for the first time this year. Price growth in 2019 approached 3%, the biggest annual increase since 2015, although it remains below the long-term average. We can expect below-average price growth going into the year 2020.

fOURTH QUARTER 2019 HIGHLIGHTS

Sales:Metro-wide there were 321 new unit sales during the fourth quarter of 2019, which is down almost by 50% compared to the number of units that sold in the third quarter; however, compared to the same quarter in 2018, sales are up. Net sales in 2019 reached 1,596 units, which is up almost 10% from 2018.

Prices:New sale prices increased in 2019 by 2.9% metro-wide.

Concessions:Average concession rates (as a percentage of asking price) are at 0.7% as of the fourth quarter of 2019, up 10 basis points from a year prior.

Pipeline:Unsold units in projects currently marketing or under construction (and not yet marketing) number 3,133 units as of December 2019, over a third higher than a year ago. Currently, the submarkets with the largest available inventory are Capitol East DC (1,174 units), Arlington/Alexandria (406 units), and Loudoun/Prince William (384 units).

Starts:A total of 630 units are expected to start construction in 2020, which is below the estimated 1,810 units that broke ground in 2019. About half of the units expected to start construction in 2020 are in the District with the rest split between the other substate areas.

Deliveries:A rebound in deliveries occurred in 2018 with about 1,600 units delivered in the region, mostly in Suburban Maryland and the District. We estimate a little over 1,200 units delivered in 2019 with 2020 bringing a similar number of units to market.

Delta Associates, the research affiliate of Transwestern, is a firm of experienced professionals which has been providing consulting and subscription data services to the commercial real estate industry for over 35years.

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