SAN FRANCISCO—When global tech titans Facebook, Salesforce and Dropbox throw open the doors this year, the city will be brimming with tech-savvy potential homebuyers along with thousands of jobs and new residents. According to Polaris Pacific, luxury buildings are swiftly selling out, with just 2.2 months of remaining inventory or a decrease of 13.4% year over year. As inventory in the market remains strained through 2018, what will this mean for home prices and competition for the various projects set to open?
Rockwell, a 259-unit development by Oyster Development in Pacific Heights, and La Maison, a 28-unit development by JS Sullivan Development in SOMA, just completed sales. Another project, 1188 Valencia, a 49-unit development in the Mission District by JS Sullivan Development, entered the market this month, GlobeSt.com learns.
According to Polaris' latest San Francisco data market report: high-rise buildings are $1,346 per square foot, down 5.5% year over year. The median price is $1.175 million, a 9.3% increase year-over-year. There were 819 total resales, an increase of 15% year over year, and 669 unsold new condominiums on the market, a decrease of 16.8% year over year.
There are 2,136 new condominiums currently under construction in San Francisco, of which, 350 units are in Mission Bay Block One, which began construction in 2015. A sizeable number of condominium projects are entitled and could begin construction in the near future in SOMA and Bayview/Portola areas.
According to The Mark Company, condominium pricing increased 2% last month from December 2017, and is now up 6% year over year. The company's price index reflects a strengthening market going into spring and continued decline in new construction supply. Absorption in new construction developments increased by 70%. Condo sales managers are seeing increased traffic and more offers being made however, buyers remain constrained by affordability ceilings and price ranges.
New construction may be seeing a bump in offers due in part to buyer fatigue with multiple offers in resales and homes selling over the asking price, according to The Mark Company.
There were 80 new condominiums placed into contract last month, which is 70% more than the number closed or in contract in December, reflecting a typical seasonal increase heading into the spring market in coming months.
Most under-construction condos are contained within large developments that will not be completed for at least two years. Inventory is expected to remain below 1,500 units for the next several years, GlobeSt.com learns.
Resale condominium prices were up 10% over December, and are up 16% year over year. The average resale price per square foot is now $1,117. Resale sales volume declined 45% in the last month as typical seasonal slowdown in transaction volumes occurred. Sales volume is 15% lower year over year, indicative of low inventory and transaction volume. Resale inventory increased to 1.9 month's supply during January, as the new year brought listings to the market. Inventory remains low despite this uptick. Stable demand and low inventory foretell a strong first quarter 2018.
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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.
