SAN FRANCISCO—San Francisco condominium prices declined 1% from the previous month according to the condominium-pricing index crunched by The Mark Company. The index fell to $1,283 per square foot in October, retreating slightly from $1,294 per square foot the previous month, but remaining 10% higher than the same month last year.
New construction sales remain strong, with 103 new condominiums placed into contract in October. The total is still less than this year's highest point of 168 units sold during May, the peak of the selling season. New construction absorption, the number of new condominiums placed into contract each month, increased approximately 129% in October, and is 17% lower year-over-year.
Erin Kennelly, director of research for The Mark Company, tells GlobeSt.com: "The fall is typically slower than the spring in terms of the number of sales per month. For a little more color, consider the year over year inventory and sales numbers: The number of units sold in October is 17% down compared to one year ago, while inventory is down 36% compared to one year ago. Part of the reason for the decrease in the number of sales is the decrease in inventory."
The average resale condominium price per square foot increased by 1% in October to $959 per square foot, up from $953 per square foot in September, and is now 11% higher than the same month one year ago.
Resale inventory is extremely low, with 372 condominium listings in San Francisco, representing only 1.6 months of inventory at the current pace of sales, noted Kennelly. New sales outpaced new additions to the inventory, resulting in a 10% decrease in the number of new condominiums currently for sale. There are now approximately 588 new units available, marking the lowest new condominium inventory level since August of 2014. Six months is considered the equilibrium between a buyer's and a seller's market.
Kennelly continues: "I do not think we are near saturation. The Bay Area is chronically undersupplied for housing. We are, however, seeing moderation in demand as a result of very low affordability levels. The Mark Company condominium-pricing index is now more than 60% higher than it was in 2012. According to the California Association of Realtors, only 10% of San Francisco households can now afford to purchase the median-priced home."
The condominium pricing index, part of the firm's monthly trend sheet is based on recent sales data, and uses a proprietary quantitative method to measure trends in market demand. It tracks the value of a new construction condominium without the volatility of inventory changes. As previously reported, The Mark Company merged with Pacific Union in October.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
