Condo Prices Rising Again in Trio of West Coast Cities
- Jul 23, 2014
San Francisco—Condominium prices rose again in June in downtown Los Angeles, San Francisco and downtown Seattle, according to The Mark Company’s Condominium Pricing Index.
According to The Mark Company Trend Sheets, the value of new construction condominiums in downtown Los Angeles was up eight percent in June over the previous year. In San Francisco, the value of new construction condos was up 13 percent. In downtown Seattle, it was up 17 percent year over year.
“All three markets face low inventory levels, strong consumer confidence and job growth,” Alan Mark, president of The Mark Company, tells MHN. “The confluence of these factors has resulted in rising prices. Another factor [is] an anticipated rise in interest rates, which could make borrowing more expensive. Buyers don’t want to miss the chance to purchase a home while interest rates are still relatively low.”
Adds Erin Kennelly, The Mark Company’s senior director of research: “Condominium prices are significantly higher than one year ago in downtown Los Angeles, San Francisco and downtown Seattle, despite new developments commencing sales in all three markets over the past 12 months.”
The Condominium Pricing Index for June in downtown Los Angeles was $667 per square foot. That number represents a one percent drop vis-à-vis May numbers. New construction inventory declined 94 percent from one year earlier, and fell 56 percent from the previous month.
In San Francisco, the June Condominium Pricing Index was $1,144 per square foot, an increase of 2 percent from May. With 401 units available, new construction inventory was 63 percent higher than a year earlier, but 2 percent less than the previous month.
The downtown Seattle Condominium Pricing Index registered at $745 per square foot, down 4 percent from May.
With 233 units available, new construction inventory in downtown Seattle was almost 13 times higher than a year ago, and up 6 percent from the previous month.
The Condominium Pricing Index is part of The Mark Company’s monthly Trend Sheet, and represents the price per square foot of a new 10th floor, 1,000-square foot condominium. Recent sales data is the basis for the index, and a proprietary quantitative method is used to measure trends in market demand.
“The Condominium Pricing Index tracks changes in condominium value over time,” Mark says. “The index is more effective than looking at average prices or median prices, because it is designed to reflect the value of a typical new condominium, as opposed to a resale that was built several or many years ago.”