What’s My Downtown Condo Really Worth?

Also the most important consideration is location. That will effectively determine the the variables above.

As I am looking for a new condo now, condo monthly fees play a large part in my value determination as well.

My quick observation is that condo prices in our neighborhood have dropped quite a bit. In my building, condos that were around $550 or so last year are down to $420-450 for sellers who need to get out quick. With some exceptions, units are sitting on the markets and most realtors have been playing the car salesman card, “what can I do for you today to get you into this beauty”

i think thats a great (and when i say great i mean simple and straightforward) way for folks to figure out where they stand in the market…and as always…thanks for the work you do..
xoxo
sb

Realtors and appraisers also look at comparables…what similar units in a particular area have actually sold for in the last 3 months.
Size, condition and location all play a part in this evaluation.

A professional realtor will be glad to give you a free evaluation of your current unitor one that you are considering purchasing, along with providing you information on units that have sold and are listed.

This is a valuable tool before signing on the dotted line. It is always good to obtain this info from THREE different realtors and look over the results on your own.

Yes — #3 is correct. I guessed what my home would probably sell for and only one of the realtors estimated it at that level. The lowest estimate was $70,000 below what I sold it for (and it sold in a bidding war in less than a week). It is important that you also have a good sense of the market before you talk to the realtors as well.

1) The post is great.

2) Everyone who rents in this neighborhood (ie me) just gasped when you said rents would have to go up. Isn’t $2100 a month for a 1br and $1600 for a studio enough? Geez.

I agree that these valuations might be helpful to get a ballpark idea of what a condo might be worth, as a first step.

But you leave out some other calculations. You talk about the “inherent economic value of any asset as backed by cash flows” as a way to value the condo. Prospective buyers must read the resale package to evaluate a condo’s financial health. This resale package will reveal other sources of probable/possible cash flows, such as reserves (or lack thereof), possible lawsuits (of which owners would share expenses), and of course any upcoming special assessments. These additional cash flows are not insignificant and could dramatically alter your valuation.

You can always drill down deeper in exploring the “what is it worth” question, and your post offers a great step in figuring it out, but I can’t imagine valuing a condo without reading the resale package. It’s like buying a stock based solely on P/E ratios and not reading its 10-K. Not all condos are managed similiarly, and you are basically buying into a business.

With this market and seeing that my 5/1 interest-only ARM is going to be up in a few years, I plan to refinance with the unbelievably low rates out there to pick-up a 30-year mortgage. Rents in the area appear up (or stable at best) so I’m planning to rent my 1-bedroom condo after I move on to a larger space. I bought well before prices spiked. The housing market in a place like downtown DC will eventually rebound so renting your unit should be a good way to wait it out…especially if you can cover your mortgage and make some profit with that rent. No time like the present with the current rates.

Speaking of renting, has anyone had any experience recently with renting their unit(s)? Specifically, I’m wondering how long it took you to find a renter. I live in the Clara Barton and will probably try and unit my one bedroom in the next few months. Based on some preliminary research it looks like similar units (some in less desirable locationsin PQ) are going for between $1900 and $2100.

What is the current approx. rental asking price for a 2br? What about purchase price?

I am in a 1br right now, but will be looking to move to a larger place in the summer. I would like to move into Lafayette or CB, but am open to others. From what I can tell on craigslist, it seems like the price is around 2800-3000. Thoughts?

#6 (dave) – thank you for making your additional points.

#6: In addition to figuring into resale value, those factors you mentioned (i.e., reserves, lawsuits, special assessments, significant construction projects, etc…) have a direct impact on the condo fees.

I would say $2,750 – $3,000 is the range for a 2 BR.

#4 – you got lucky. Virtually no condos in Penn Qtr sold in 2007 with a bidding war. Sometimes it is just luck…the right buyer(s) came along on the same weekend you put your place on the market. Had you been a month earlier or later you could still be sitting on the market. There were some interesting spikes on prices in some buildings/units downtown for a short period early in 2007 that are now showing signs of being unsustainable for other sellers in the same buildings/units and those few buyers are going to be very sorry.

re: # 5 disclaimer – you should also not put too much stock in the reports of The Washington Post because good news is bad news so they always work to minimize the fact that often DC proper does much better than our “region”. Not saying that all the news in the DC Real Estate market is good (clearly it is not), but for DC it is not as bad as the region. Be sure to look at DC stats. True, things are not totally rosey, but the sky is not falling.

Two weeks ago, a query on market rent for 1 bdrm in heart of PQ put the range at $2,100 to 2,500 per month. You can check current market rates at http://www.rentometer.com/

Many good points raised here. But I don’t think a square-foot measure that’s true for a one or two bedroom, something 650 square feet and larger, is true for smaller sized units. Square foot prices tend to be higher with smaller units, such as studios, places in the 350 to 500 square-foot, especially if they are in a desirable location. While you can certainly find studios for $180,000-$225,00 [400 to 500 sf]if you do find something for less than $220,000 in NW, in particular, it usually has some issues, such as basement/garden apt., coop with tough use restrictions, rehab needed and/or high fees.

#14 (PQer) – to your point…there are zip codes in this city that will always do a brisk business like 20007 and 20016. but still you have to look at the #s. transaction volumes are definitely down in 2007 even if price stability was maintained.

#15 (Evroult) – love the rentometer. our writer PQGirl mentioned it in her post last August also.

#16 (kob) – good point. thanks for pointing out.

Rent on a 1 bedroom + den can be as low as $2300/month, including a parking space (a possible alternative to the much more expensive 2 bedroom units).

So if someone were to theoretically pay $274k for a 10th floor, 515 sq/ft studio in a new building such as say.. the Dumont. Would they consider not closing on the deal and losing their 13k earnest money deposit?

Did they grossly overpay? Is the value of their unit going to decrease 30% like the experts say? Should they be seriously regretting the decision?

hmmmm…

Rumor is that the Dumont is going half hotel… can anyone confirm this?

# 17 – I was speaking of zip 20004 only. Clearly other zips and other types of properties hold value better than others.
# 20 – Have heard that too but have not seen anything in writing to confirm.

I’m not 100% but I have some friends that work at Davis Construction… The second phase of the Dumont (The yellow, corner building with the endless facade of balconies) was being looked at for possible hotel conversion in the design stages. If you go to the Dumont sales center and look at their model, the base of phase 2 shows a very different footprint than what was actually built.

If it does in fact go hotel, let it please be something nice and W-like. No more Hampton, Red Roofs, or Holiday Inns please!

: \

re #17 – Sorry – I meant price stability in DC vs. Region, not zip. My post in #13 was about zip 20004 only…sorry for confusion!

I read the second half of the DuMont was sold or leased to a company that would exclusively provide business suites. But, I also heard from their salespeople that this is not the case, and the units will be sold as condos.

This is going to be possibly the highest quality condo building in DC. You can buy your parking space, which alone is a good investment (my rental parking bill did not go down 30%, did yours?). I think it is a very solid investment.

The Dumont sales office is in my building (the Clara Barton). It always looks really nice to me, for whatever that’s worth!

I just read in the Post District Weekly section that # 209 in the Clara Barton sold for $325,000. I have no idea about the number of bedrooms etc.
There are a lot of nice condos in good neighborhoods for prices similar to those a few years ago – $200-225,000 for a studio, $300-325,000 for a one bedroom, $400,00+ for a two bedroom. Not sure about that Dumont condo – $275,000 is a lot for a studio. & the building is only new once – once you’re there it loses that cachet & is just another “used” condo.
Renting your condo [or house] is often a better idea than selling it, as long as the rent is close to the mortgage payment. You still get the interest deduction, plus the property tax & maintenance, and you can depreciate it & get additional tax benefits.
See your tax adviser