Peninsula Condo Market Remains Weak

SAN FRANCISCO-The condominium resale market on the San Francisco Peninsula remains weak and has yet to find a bottom, according to a new report by locally based Polaris Group, which offers development services to the industry. While pending re-sales increased 8.6% on a year-over-year basis during the three-month period ended on April 30th the median price declined by 26% to $398,000 and inventory levels continued to rise, reaching a new high of 9.5 months (607 units).

Polaris says a total of nine new condominium communities between Palo Alto and South San Francisco are offering 477 homes for sale came on line during the period, which is 49% of the total number of new units in those buildings, the others having been put under contract or sold. There are an additional 525 units under construction and not yet offered for sale, with scheduled deliveries in 2009- 2010.

“Although price discounts helped increase sales, further cuts are likely needed,” states the report. “In San Francisco, for instance, 20 to 25 percent price reductions boosted the rate of new home sales by about one-third.”

Resale transactions decreased to an average of 60 units closed per month over the past three months, a 27% decline from one year ago and a 53% decline from two years ago. The average number of days a condominium remains on the market jumped by 60% to 83 days from 52 days in 2007.

“The increased market time is indicative of greater competition sellers currently face and rising inventory levels of unsold homes,” states the report.

The report provides a rundown of several condominium developments on the Peninsula. Park Station, a 99-unit project across the street from the South San Francisco BART station. Sales began in September 2008 and the project was completed three months later. Twenty-four units are under contract, including eight of the 19 BMR units, which works out to 2.8 sales per month. HOA dues are in the high $300s per month.

Landmark Plaza, a 95-unit development in Daly City, is part of a development that includes the Daly City public library and War Memorial and has estimated HOA dues of approximately $400 per month. The development has been open for 12 months; only seven units have been put under contract.

Echelon, a 70-unit project in Palo Alto, is a garden-style, multi-building project scheduled for completion this July that has HOA dues in the mid-$200 range More than half of the units have been sold or are under contract.