As the city’s housing market ping-pongs around in the new normal of COVID-19, a few facts are emerging. First, single-family homes are selling and at a good clip. Second, we’re creeping up to a six-month supply of condos in the city — the largest I’ve seen since the Great Recession. And the mainstream press has yet to report on it.
What the Media is Missing
Right now, current real estate headlines are touting:
- People are ‘fleeing’ cities, which is not exactly accurate in San Francisco’s case. It’s definitely true home sales are up and inventory is down to historic lows in areas close to the Bay Area (Napa, Truckee etc),
- The stunning rebound of Bay Area homes, with sales surging nearly 70% from May to June and prices rising 3.6%. This is true in San Francisco’s single family home market.
- Inventory across the nation is inching toward historic lows.
One thing has become apparent to the agents in the city. The inventory for condos in San Francisco has been quietly creeping up to an almost six month supply and it’s being felt by every agent who has a condo listing or two — which is most of us. What does that mean for you? If you’re a seller of a condo in the next six to twelve months, it would be wise to be in front of that consumer confidence train. Just make sure to price your condo appropriately. If you’re a buyer, there is an incredible opportunity to negotiate on pricing and cherry pick your place.
Many buyers come into the market with a prejudice against living in a community, but there are a ton of great reasons to consider condo life. Of the many reasons I chose to buy primarily condos in my 26 years of personal real estate investing is the fact that I do not care to deal with the ongoing maintenance of a home and it’s surrounding land, costs that can add up quickly. Pooled resources can be a fabulous thing when it comes time to repair the roof or paint your exterior, not to mention the ever-increasing insurance costs. And all the better if you buy into a well-run or smaller association where you have more of a say in controlling those costs. Safety and the ability to leave your place vacant while away — without worrying about being a break-in target — are among the many other valid reasons to be part of a condominium complex.
It’s all about what you choose to make an offer on. And with many condos giving you more usable square footage than the majority of single-family homes, along with a lower price per square foot, and the ability to take your time negotiating, there is a great opportunity offering itself for the savvy buyer.
Why Hasn’t the Press Noticed Yet?
Don’t be too hard on them. Most graphs are showing what was, not what is and what is still to come down the pipeline. Consider these two graphs. They’re both accurate, but one shows a much clearer picture of what’s happening to the condo market.
If a property in San Francisco has been on your wish list and you’ve been priced out of the single family home market, find an excellent condo that reads like a single family home and negotiate. Many condos will offer you more space than a traditional single family home and your all-in costs, when you factor for pooled maintenance expenses and insurance, are often less, while still providing you better finishes than your SFH (which often requires a kitchen and bathroom update, not to mention new roof, windows and foundation).
Work with an excellent buyer’s agent — there are some incredible opportunities out there. You heard it here first!