The District dispatched with 18 falling-down and unbuilt properties this afternoon, in a brisk auction with a clear takeaway: While investors are willing to pay top dollar for eyesores in good neighborhoods, there’s still little interest in marginal markets on the eastern end of the city.
Case in point: before the auction began at the Washington Convention Center, Alex Cooper Auctioneers re-ordered the list to put four of the most desirable properties—922 French Street NW, 1444 Fairmont Street NW, 1713 New Jersey Avenue, and 1334 R Street NW—at the top of the program.
“They’re taking the best ones first,” noted Thaddeus Minshall, who was there with his father Werner—a Bethesda-based investor—to get a sense of the market. “The rest of these are…” he trails off and shrugs. “Definitely in tertiary markets.”
Tom Kadida, a prospective buyer who’s bought, redone, and resold seven properties in the city, said he was mainly interested in the Columbia Heights-area houses. “I’m not Donatelli Development,” he said. “That is the goal…follow in the footsteps of what they’ve done.”
The bidding started off briskly, jumping up by tens of thousands. French Street went for $370,000, and the Fairmont house for $390,000. The biggest shocker, though, was a bidding war that pushed the price of an empty lot at 13th and R Street up to $590,000, far outstripping anything from last year’s auction and surprising even auctioneer Paul Cooper.
“I don’t want anyone tearing down your homes in order to sell it,” he admonished the audience, which buzzed in wonderment.
After that, Cooper proceeded to properties in the cooler markets. About a third of the packed room got up and left. The bidding started out at $10,000, and often crawled up in $5,000 increments. Three multi-unit apartment buildings closeby each other on Forrester Street SW sold for between $55,000 and $65,000 each, while an empty lot on Douglas Street NE went for $20,000. Manna, Inc.—one of few non-profit housing developers in the audience—picked up a lot at 805 7th Street NE for $160,000, planning to rebuild it as a market-rate house to subsidize its affordable projects.
One reason for the low prices may have been the long list of restrictions attached to these sales: Each one will now have to go through a disposition hearing in August where the public will be able to weigh in, as well as prove that it has the financing to complete the renovation, in order to close. Within 180 days of closing, they will have to finish the job.
Of the 30 properties that sold at last year’s auction, only 17 closed, generating $3.7 million in revenue for the District (only one of the ones that didn’t close found its way back to this year’s batch). The total take for this year’s sales was a little over $2.7 million.