SFGate.com — the SF Chronicle website — ran an article today, titled “Bay Area Condominium Sales, Prices Tanking”:
From Paragon’s Director of Business Development:
It talks about how financing difficulties, foreclosures and increasing HOA dues have hammered the Bay Area condo market. All of those issues are indeed important factors in today’s market, but they misrepresent recent trends.
First of all, in the Chronicle’s chart from DataQuick, it shows that the 2010 median price for condos in SF ($650,000) is 14.5% below peak values! Of course, we all know values have fallen from peak values in 2007/2008 — that is old news. What the article doesn’t make a big deal of, is that the chart shows that the SF median condo price in 2010 was HIGHER, admittedly by just a little bit, than the median for 2009 ($640,000).
In fact, the median price either increased or statistically stayed the same for 7 of the 9 Bay Area counties, 2009 to 2010, and the median for ALL Bay Area condos sold increased 5% in 2010 ($290,000) over the median for 2009 ($275,000).
For some reason, by some logic, that justifies a headline today about “prices tanking.” By my reckoning, the data actually points to the fact that market values are strengthening a little or, at the very least, have stabilized over the past 2 years.
Now for a few SF condo market statistics, because I can’t really speak to the other counties’ markets. Comparing condo resales (through MLS) in the 1st Quarter of 2010, with the 1st Quarter 2011 just ended:
The total number of SF condo sales increased 19% (“Sales Tanking”???)
The number of distress sales of condos in SF (bank-owned or short sales) increased significantly from 63 to 119, a large jump, however the median price for distress condo sales stayed virtually the same ($421,000 vs. $420,000), and the median price for regular, non-distress condo sales — still 75% of the SF condo market — increased from $683,500 to $699,000. (“Prices Tanking”???)
For all 2-BR condos sold in SF (through MLS), the overall median basically stayed the same ($710,000 vs. $711,500), but for non-distress sales, the median sales price increased from $725,000 in 2009 to $760,000 in 2010.
Looking at the 4 Realtor Districts in San Francisco with the most MLS condo sales, for 2-BR condos:
District 5 (Noe/ Castro/ Haight): the number of sales stayed virtually the same (37 vs. 38) and the overall median sales price increased 4.5% to $773,000.
District 7 (Pacific Heights/ Cow Hollow/ Marina): the number of sales increased 18% (17 vs. 20) and the overall median sales price increased 6% to $967,000.
District 8 (Russian, Nob, Telegraph Hills/ North Beach/ Tenderloin/ Civic Center): the number of sales increased 31% from 26 to 34, while the overall median sales price declined 3% to $762,500. But note that District 8 has neighborhoods of wildly differing qualities, so sales occurring in one neighborhood over another will change the median price, sometimes relatively dramatically. (Districts 5 & 7 are relatively homogeneous in value throughout the districts.)
District 9 (SOMA/ South Beach/ Potrero Hill/ Inner Mission): the number of sales increased 13% from 68 to 79, and the overall median sales price increased 4% to $701,000.
For 1-BR, condo sales in all of SF, the number of sales stayed the same, while the median price for non-distress sales, declined about 5%. It is true that the market for 1 BR condos, especially in certain neighborhoods, has been hit a bit harder by distress sales than other market segments. Distress 1-BR condo sales in the 1st Quarter of 2011 made up a high 31% of sales.
My main quibble with the Chronicle article, as with others they’re run, is not with their statistics, but with the hysteria and lack of context of their headlines and main statements. They’re constantly comparing today with the market-bubble peak 3 to 4 years ago, while ignoring the positive trends of the last 2 years, and their headlines love to crow with more supposedly “breaking” bad news about the SF and Bay Area home markets.
And that is just bad journalism.
Condo sales have actually increased significantly and median prices have either increased a little or basically stabilized.