Dees Stribling, Contributing Editor
San Francisco–The recession greatly slowed the development of for-sale condominium housing in San Francisco, according to the most recent report on the city’s residential market by the Mark Co., a locally based residential real estate specialist. The report also noted that prices of existing condos have dropped 10 percent since 1Q09.
The number of for-sale residential units under construction at the end of the first quarter of 2010 was 212, the lowest total of under-construction units since before 2004, according to the report. “Although there are more than 40,000 units under review with or approved by the City of San Francisco,” the report finds, “only a small percentage of these projects will likely come to fruition as planned.”
New condo inventory in the city is likewise shrinking. As of 1Q10, there were only 1,330 available units, but about 500 of those are already under contract though not yet closed. That leaves 800 new-construction condos currently on the market, a 43 percent decrease from the first quarter of last year.
A total of 183 new-construction condos closed in San Francisco during the first quarter of 2010, according to the report, an 11 percent increase compared to one year ago. The average price for the closed properties was $793 per square foot, up from $680 one year ago, but that average was pushed upward by closed sales at Millennium Tower, which began closings in the second quarter of 2009.
“While we are noticing that some developers are more realistic about pricing homes in line with the market, there’s still some disconnect in terms of expectations,” Alan P. Mark, founder and president of the Mark Co., tells MHN. “Some sellers may be using comps that are six months old. In addition, sellers are more often competing against buyer complacency rather than other buildings, as many buyers are looking to purchase at a price that is below today’s market. Buyers and sellers are both working to gain a better understanding of today’s changed market, but a balance has not been reached across the board.”
Existing condo sales were up in the first quarter of this year, the report also found. There were 247 resale condos sold during 1Q10, representing a 127 percent increase compared to one year ago. The average price decreased by 10 percent over the same period, indicating that some sellers have become more realistic in their price expectations.