Mark Company Report Shows Condo Pricing Increasing in Three Key Areas
- Jun 17, 2014
Los Angeles—The Mark Company has released its monthly Condominium Pricing Index tracking new construction and resale market trends, and reports that condominium prices increased in downtown Los Angeles, San Francisco and downtown Seattle in May 2014 over the previous year.
According to its figures, downtown Los Angeles was up 11 percent year over year in, San Francisco was 14 percent higher and downtown Seattle registered a 24 percent gain.
“All three markets are facing strong demand and lack of inventory,” Alan Mark, Mark Company’s president, tells MHN. “I don’t see demand slowing down over the next year. San Francisco is poised to receive over 1,000 new units before year-end, and I think absorption will remain very strong. Downtown Los Angeles re-sales are likely to see an increase in values due to lack of new construction inventory.”
The Mark Company Trend Sheets show that San Francisco tripled its inventory between April and May with the addition of Arden, which accounts for the majority of the 400 units currently available.
“Despite today’s for-sale market conditions, the pipeline is still two-thirds rental,” Mark says. “Over 25,000 units are approved with undetermined product types. Whether these units become condominiums or apartments will have a huge impact on the San Francisco housing market over the next decade.”
The May San Francisco Condominium Pricing Index was $1,125 per square foot, up 1 percent from April. New construction inventory in San Francisco was 66 percent higher than a year ago, with 408 units now available.
San Francisco’s growth is being heavily affected by the current tech boom, as new neighborhoods are emerging and changing, and developers are racing to bring product to market to meet this demand. Areas such as Mid-Market have come alive with the addition of major employers such as Twitter, Square, Uber and Yammer.
“This is a neighborhood you would hesitate to walk around at night five years ago. Now, it’s brimming with new housing, restaurants and bars,” Mark says. “It’s the place to be. The San Francisco Shipyard also recently launched in Hunters Point, a neighborhood that has seen very little residential development over the past several decades. It will have new housing, retail, offices and entertainment that will be unveiled over the next 10 years.”
In downtown Los Angeles, the Condominium Pricing Index for May was $673 per square foot, which is up 4 percent from April. New construction inventory was 86 percent lower than a year ago, and down 59 percent from the previous month.
Lack of inventory is the biggest factor in downtown Los Angeles as there are fewer than 10 new condominium units available, and only six or seven of those are priced under $3 million.
“The addition of L.A. LIVE and enhancement of neighborhoods like South Park and the Arts District has made downtown Los Angeles an increasingly desirable place to live,” Mark says. “There’s great food, the arts, sporting events, concerts and jobs. The area has come a long way. The lack of inventory may prime the market for condominium conversions, which can hit the market fairly quickly and take advantage of unmet demand.”
The Downtown Seattle Condominium Pricing Index was $775 per square foot, which is up 6 percent from April. New construction inventory in downtown Seattle was more than 1,000 percent higher than a year ago, but down 6 percent from the previous month, with 219 units available.
According to Mark, Seattle is facing the same inventory challenges as San Francisco and downtown Los Angeles.
“What stands out about Seattle, though, is that unlike San Francisco which has met increased demand with numerous smaller developments, Seattle buyers have a new construction tower option in Insignia,” he says. “Insignia by Bosa is the only new condominium building under construction in Seattle.”