"If you want new construction, demand will soon outstrip supply,but other factors such as interest rates and availability of homeloans will also have an effect," Zeger said. "Year-over-year salesare up for the second straight month in many markets, such asContra Costa County and specifically, Walnut Creek, along withprice increases from Oct. 2009 to Nov. 2009 of 8.5 percent."

Inventory of new condos priced less than $729,000 is not beingrefilled, he says, so current sales are depleting inventoryrapidly, and are likely to raise prices for remaining product. Toback up his thesis, Zeger points to three projects in the East Bay,all of which it represents.

One such property is 555YVR, an 87-unit boutique condominiumdevelopment next to downtown Walnut Creek and the BART station.One-third of the units were under contract when closings beganthere in October and sales are expected to accelerate in Januarywhen the property will be able to offer FHA loans. The averageprice–per-square-foot is $467 at 555YVR versus $310 on average forall condos in Walnut Creek.