Is Buying a Condo Worth it in WASHINGTON DC
Condos enjoyed a decades-long run of popularity in the Nation’s Capital. Then this thing called Covid hit and everyone scrambled to get out to the suburbs. They wanted land and space. This was short-sighted, even without knowing how long the pandemic would last. Now that we are coming up on the four-year anniversary of the world lockdown, how has condominium ownership fared? And is it time to consider buying a condo again?
Buyers have come back to the condo market, and the condo market is embracing them. The condo was in the corner of the room, smoking a cigarette, nursing a gin and tonic and saying, “Of all the gin joints in all the town, in all the world…”
I’m going to tell you five reasons why it’s a great idea to consider buying a condo.
1) Not many other people are…yet
Who do we always quote around here? Warren Buffet – Be greedy when others are fearful and fearful when others are greedy. Since 2023 when mortgage rates started rising, we’ve seen a resurfacing in the interest in condos. Why? These are buyers who have been priced out of single-family homes. The rat race of chasing the new homes, watching the prices get bid up, the contingencies be waived, that got old after a couple years. Condos in DC basically fell off a cliff and became very difficult to sell. We’ve seen a resurgence of people coming back to reconsider a condo. Of course, city life having opened back up again has helped.
Historically, as in, pre-covid, condos weren’t as sought after in the suburbs as they were in DC. People wanted their city-living but when they moved out to Northern Virginia or Montgomery County Maryland it was to buy a house. That’s not the case anymore in many parts of Northern Virginia. I have a client who is currently finding multiple offers on condos in places like Oakton, Reston and Herndon.
2) The Condo Market is Ready to Embrace Buyers
There is enough for sale in many areas that the buyer now has options of places to see, and choices to make. This is a good feeling when the last decade has been a time where all choices have been taken from buyers. You won’t have to settle. You can get a place that checks most if not all your boxes.
3) Escalations are Minimal
In cases where there is interest from multiple buyers, translating to multiple offers, you won’t see escalations like you used to or that you see on houses. The price escalations may go up $10,000 – $15,000. And while I get that this is money you would rather not spend, this feels like a dream compared to what things used to be like with a mass exodus of the condo market to single family homes and escalations of hundreds of thousands of dollars over asking price.
It’s also easier to “predict” what will happen on a condo escalation as opposed to houses where it was anyone’s guess if it would go up $50,000, $100,000 or $300,000.
4) Minimal Upkeep
Do you want to spend time mowing lawns, shoveling sidewalks or constantly fighting mice. Because that’s what homeownership has boiled down to for us. We don’t want to spend our time doing these things and it can be a real drag. I miss the days of dumping my trash down a chute and never seeing it again. I won’t miss not being on the email list serv for the rat patrol for our alley, where we’re reminded to put a rock on our trash cans to keep the rodents away.
If you are back to a life of travel and leisure again, then the idea of turning the key and walking away from a condo and not needing anyone to watch it for you is pretty appealing.
5) The Lender is Your Friend
You may recall that during the whole Covid pandemic, we also witnessed the collapse of the Surfside Condo building in Miami. Things changed with lenders as a result of this, and they changed for the better. Side note – I have a couple videos on condo documents and what you should look for in reviewing them.
Long before Surfside, I would tell anyone who would listen that I despise 1980’s construction. It feels shoddy no matter where it is. My condo in DC is from the early 80’s and it’s been riddled with issues that trace back to the corners that were cut when it was built. My parents had an early 80’s condo in Florida, same thing. You can usually tell 80’s construction by its general ugliness and popcorn ceilings. Surfside was also a 1981 product.
Your lender is going to do everything in their power to ensure you don’t find yourself in a Surfside situation. They have strengthened the requirements of condos, requiring larger amounts to be set aside for reserves, engineering studies in some areas and stronger insurance requirements. In some places like Florida all eyes are on insurance and the companies and the state have gotten involved to mandate more protections for these homes. In many cases, condos are forced to replace roofs at regular increments (i.e. every 20 years) regardless of condition, otherwise their insurance company could drop them.
We’re only seeing the beginning of this in the DC Area, but I did tour a condo in Northern Virginia that had structural issues. They still had multiple offers, but whether it makes it through financing is another story. My client and I determined this was a risk not worth taking.
Are condos going away? I vote no. They aren’t making any more land and as the population explodes, we need places for people to live. The prices on condos now are fantastic and I wholeheartedly believe their heyday is coming.
