It's great that San Francisco is getting more housing. There are many additional SOMA developments planned over the next 8 years, which will bring an excess of 1,800 condominium units to the market. Regardless of that fact that a certain percentage of units are required to be designated as Affordable Housing, it will be interesting to see the pace and stages of release on these upcoming condominium units. Bringing the units to market several at a time will create a more balanced market, meaning, supply and demand will be in line, which will drive prices down. So the question is: when it's all said and done, will the new condos really go for $1 million each? If so, that will leave many San Franciscans still out of reach for home ownership.
It's hard to tell. Both buyers and sellers have control over which way a real estate market moves, depending on the unity of each group. The suppressed market that was seen in the last few months of 2005 is a perfect example: educated buyers collectively decided they would not pay what they considered an unsubstantiated amount for properties in a time when interest rates were rising and loan options appeared to be more risky. Meanwhile, sellers stuck to their guns on getting an equal or better price for their homes than their neighbors did at the height of the 2005 market, resulting in properties having longer days on market and ultimately not pulling multiple offers.
In contrast, during the "slow period" at the end of 2005, there were a few properties that flew off the market and received multiple offers. Why? Because they were priced at what seemed to be "value" to all many buyers out there. The lesson: Sexy sells. And value is sexy.
See the SF Chronicle article on the Rincon Towers here.
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McGuire Real Estate
ablakeley at mcguire.com