If you want new construction, demand will soon outstrip supply, but other factors such as interest rates and availability of home loans will also have an effect
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San Francisco (Vocus) December 25, 2009
Pacific Marketing Associates, the Bay Area’s leading provider of sales and marketing services for urban residential real estate developers, predicts increased demand and limited supply will trigger price movement in at least one sector of the real estate market: condominiums under $729,000.
“Several factors are pushing average sales prices up in that mid-range market,” said Paul Zeger, president and founder of Pacific Marketing Associates and a noted expert on Bay Area condominium sales and marketing trends for more than 35 years. “Year-over-year sales are up for the second straight month in many markets, such as Contra Costa County and specifically, Walnut Creek, Calif., along with price increases from Oct. 2009 to Nov. 2009 of 8.5 percent.
“If you want new construction, demand will soon outstrip supply, but other factors such as interest rates and availability of home loans will also have an effect,” Zeger added.
A recent BusinessWeek article (Dec. 8) by Marc Roth was more blunt, saying that “if you don’t buy a house now, you are stupid or broke.”
“Interest rates are at historic lows but cyclical trends suggest they will soon rise.” writes Roth. “Home buyers may never see such a chance again.”
Zeger agrees the first quarter of the year will be a good time to purchase:
•Low interest rates, ongoing federal benefits and FHA loans are having a significant impact, especially with first-time homebuyers seeking new homes under $729,000 (the limit for these loans).
•Inventory of new condos priced less than $729,000 is not being refilled, so current sales are depleting inventory rapidly, and are likely to raise prices for remaining product.
- The federal government is taking away the mortgage relief fund, which they’ve used to buy up mortgages; after March 31, interest rates will likely increase.
Moreover, several buyer trends are emerging:
- Trend in parents’ investing in their children’s first home. Many first-time homebuyers are getting financial and other support from parents.
•Ongoing trend of mature adults, shedding suburban homes, for condos in urban neighborhoods, which includes San Francisco and Oakland, but also retail hubs such as Walnut Creek and Emeryville.
According to Zeger, recent developments at projects in three distinctive East Bay markets are also hinting that the mid-range condo market is heating up:
•In Contra Costa County, and specifically Walnut Creek, the trends are resulting in heavy traffic and consistently increased year-over-year sales absorption figures. At 555YVR, an 87-unit boutique condominium development next to downtown Walnut Creek and the BART station, closings began in October. It’s currently one-third sold or in contract. The average price–per-square-foot is running at $467 at 555YVR versus $310 on average for all condos in Walnut Creek. In January 2010, 555YVR will be able to offer FHA loans, which should spark an immediate sales surge.
•In Oakland, The Ellington, a 146-unit, 14-story condominium in Jack London Square, is more than 30% sold or in contract which makes it the hottest-selling development there in nearly two years.
- Meanwhile, at Vue46 in Emeryville, they are getting 8-10 deals a month and seeing completion for some homes for the first time in more than 18-months.
Pacific Marketing Associates has been involved in large multifamily developments in California, including Bay Area, Los Angeles and San Diego, for more than 25 years.
About Pacific Marketing Associates
Pacific Marketing Associates (PMA) is the San Francisco Bay Area’s leading provider of sales and marketing services for urban residential real estate developers. Since its founding in 1979 by Paul Zeger, PMA has delivered more than $3 billion in sales and closed escrow on more than 18,000 homes – from high-rise residential towers, to town homes, to urban lofts. PMA specializes in the marketing and sale of new, for-sale, high-density, urban in-fill residential communities, condominium conversions, and resort properties. Current Bay Area projects include One Rincon Hill, Soma Grand, 555 Bartlett and Union in San Francisco; Axis, City Heights and the 88 in San Jose; Altaire in Palo Alto; The Ellington in Oakland; Vue46 in Emeryville; and, 555YVR in Walnut Creek. PMA’s Southern California projects include Alta and Aria in San Diego, as well as The Lofts at Hollywood & Vine in Los Angeles. For more information about PMA, call (415)346-7888 or visit http://www.pmateam.com.
CONTACT: Spencer Moore, 415.317.7100