- The Washington Times - Tuesday, November 7, 2006

The fast pace of condominium sales in Washington has slowed to a crawl, making some developers rethink sales strategies.

Monument Realty has indefinitely suspended sales on half of its latest condo-conversion project, the Chase, which sits across from the Bethesda Metro station.

The company began sales in May for its two seven-story buildings and more than a third of the 255 condos in the south building were sold.

But Monument Realty said last week it has decided against selling the 122 living units in the north building as condos.

Instead, they are likely to remain apartments while interest rates about 16 percent higher than early last year persuade more residents to rent apartments rather than buy homes.

“Our plan was to market all 377 units initially and if there was demand for this many units sell them all as condominiums,” said Michael Darby, principal and co-founder of Monument Realty. “If not, we could always renovate both buildings, sell the south tower as condos and reposition the north tower as high-end rentals.”

The company described the Chase condos on its Web site as, “A rare opportunity to own the only property available in the best part of town.”

Nevertheless, rising interest rates earlier this year and higher construction costs led to a backlog of unsold residences, prompting Monument Realty and other developers to reconsider whether now is the best time to find buyers.

Average rates on a 30-year fixed mortgage stood at 6.31 percent last week, according to banking information company Bankrate.com.

Condos tend to be the most popular housing option in the Washington area compared with townhouses and single family homes, according to the Greater Capital Area Association of Realtors.

“Part of it is just a price point,” said Amy Ritsko-Warren, the association’s spokeswoman. “They are among the most affordable options. It tends to be an issue in major metropolitan areas.”

Condos also were the first to get hit by the recent slowdown in housing sales.

In one example, developers of the planned $1 billion Canyon Ranch Living mixed-use complex for North Bethesda are canceling the project and refunding $59 million in buyers’ deposits.

Declining sales in the luxury condominium market convinced the developers of the 53-acre complex that “the timing was not right to launch the project as it is currently designed and structured,” they said in a statement.

The project might not be dead, only delayed until the housing market improves.

“We’re continuing to talk with the landholders on redesigning the property,” said Erinn Figg, Canyon Ranch spokeswoman.

In a similar move, Centex Cityhomes said it has put its condominium project at 1200 East West Highway in Silver Spring “on indefinite hold.” The developer has not announced whether the project would be completed.

“You had 45,000 condos on the drawing board,” said Dale Mattison, a Chevy Chase real estate broker, referring to developments planned for the Washington area. “Unfortunately, everybody wants to get into the housing market when things are hot.”

The U.S. Department of Commerce reports that median new-home prices average 9.7 percent below this same time last year.

Sales of condominiums have been most deeply affected by falling prices, Mr. Mattison said.

“There’s just an abundance of them,” he said.

A National Association of Realtors survey in September found that half of the 454 real estate agents who responded said cancellations by buyers of existing homes are running higher than the historical average of around 2 percent.

Real estate agents say buyers often think they can find a similar property for a cheaper price elsewhere. Some new homeowners report being upset that homes are selling for thousands of dollars less than prices they paid a year or two ago.

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