February 2013 Report, with April 2013 Update
More condos sell in the South of Market (SoMa)-South Beach-Yerba Buena-Mission Bay neighborhoods than anyplace else in San Francisco. This is where by far the greatest number of new condos have been built since the 1990’s. The market here has been heating up very rapidly: buyer demand, prices and luxury condo sales have all been increasing rapidly in 2012. With the crash in new construction in 2008, the number of brand new condos coming on the market rapidly declined, adding to today’s inventory crunch. (New condo construction is now dramatically rising again, but it will take a year or two before these units begin to reach the market.) This is one of the main areas in the country for high-tech and bio-tech businesses and home buyers, as well as being adjacent to the city’s large financial district.
Since opening our doors in 2004, Paragon has represented buyers and sellers in over 775 transactions totaling almost $700 million in sales in these neighborhoods. We’ve closed 170 sales of $1,000,000 or more, and almost two dozen of $2,000,000 or more. This is an area we know and love well.
If you adjust your screen view to a 125% zoom, the charts will be that much easier to read. On Windows systems, pressing the Control and + keys simultaneously should do this quickly.
Sales by Price Range
The greatest number of condo sales in these neighborhoods is in the $500,000 to $750,000 price range, however many sell for less (sometimes distressed property sales) and many sell for far more. Indeed, some of the most expensive condos in the city, usually with staggering views and selling at dollar per square foot figures above $1000, are found here in distinctive buildings among the most beautiful in the world. One condo in this area sold for $28 million in 2011. In 2012, the largest sale through MLS was $7,850,000 for a unit at the Millennium.
Longer-Term Trends for South Beach & SoMa Values
The four following charts and tables track average sales price and average dollar per square foot for non-distress condo sales by year since 1995, specifically for the South Beach/ Yerba Buena and SoMa neighborhoods. Remember that average sales price is different from median sales price (which is used more often), but is just another way to look at long-term market trends. Distress sales (bank and short sales) were excluded from this analysis to provide an apples to apples comparison over time. The market recovery in 2012 can be seen very clearly.
Condo Sales $1,000,000 & Above
The sales of higher-end condos surged in 2012. There is huge demand for the best condos in the best buildings.
Listings Selling Over, Under and At List Price
As the market has grown stronger, the number of listings selling for over asking price has increased.
Number of Listings Sold
The only reason the number of condos sold decreased in the 4th quarter of 2012 was a drastic shortage of listings available to purchase.
Percentage of Listings Accepting Offers
This statistic is an excellent snapshot of supply and demand. In 2012 the percentage of listings accepting offers (going under contract) hit its highest points in memory, reflecting very strong buyer demand vs. a limited supply of condos for sale.
Condos for Sale
The inventory of condos listed for sale through MLS is far below that of previous years and is not currently anywhere close to being adequate to meet market demand.
Months Supply of Inventory (MSI)
MSI is the lowest it has been here in years, if not ever. The lower the MSI, the stronger the demand as compared to the supply of homes for sale. MSI readings this low — especially below 2 months — would typically be considered indicative of a very strong “Seller’s Market.”
Price Reductions, Sales Price to List Price Percentage, and Days on Market
The market is divided into 3 groups: 1) those condos which are well priced, show well and are comprehensively marketed, which sell relatively quickly at, on average, a little over the asking price, 2) those condos that go through one or more price reductions, take much longer to sell, and close at significant discounts to the original list price, and 3) those that don’t sell at all, typically due to being perceived as overpriced.
Distress Condo Listings & Sales in the Greater SoMa Area
Because so many large developments were built here in the last 15 years, this area had more distressed condo sales (bank-owned property sales and short sales) than any other area of the city. However, the number of distressed listings and sales has been declining rapidly as the market has turned around. It is now well on its way to disappearing altogether.
Median Sales Price Trends for 2-Bedroom Condos in Selected SF Neighborhoods
A comparison of median price trends for 2BR condos in 5 of the city’s neighborhoods. All have seen substantial jumps in median sales price, but perhaps none more than South Beach/ Yerba Buena neighborhoods.
The New-Development Condo Market
The vast majority of new-condo construction over the past 15 years has been in this greater area. The 2008 financial crisis caused new condo construction to crash in SF, which led to large declines in new-condo listings and sales. Even though new construction is now recovering in a big way, this large reduction in new-condo inventory for sale has had significant ramifications for the supply and demand dynamic. The new inventory of newly built condos will be at least a year to two years before arriving in large quantities.
Though in this analysis, the four neighborhoods are sometimes grouped together, there can be significant differences in market dynamics and values between them. The only way to value a particular property is by performing a specific comparative market analysis based on its location, quality and amenities.
All data herein is from sources deemed reliable, but may contain errors and is subject to revision. Please contact us if you have any questions.