Condominium markets across the West Coast are showing promising numbers heading into 2022 as median costs are continuing to increase. According to a recent report from Polaris Pacific, which analyzed cost changes in Western condominium markets, 2021 ended with an extremely low condo supply. In turn, prices in many of the region’s top markets were significantly driven up.
“Condominium prices have increased modestly in most markets. The rate of increase has been most pronounced in non-coastal markets such as Denver and Phoenix/Scottsdale, which have seen an influx of new residents from the coastal markets. At the same time, condominiums in the major Western cities have erased much of the price declines experienced in 2020 and 2021. Office reopenings this year will further support this recovery,” Miles Garber, Polaris Pacific’s vice president of research, said.
Although median sales prices for condos in Western markets like Phoenix and Denver climbed at a quicker rate, West Coast markets are seeing higher rates by far. San Francisco’s condo market experienced the highest median sales cost at $1.25 million, while other coastal markets like Seattle and Los Angeles saw median sales prices of $655,000 and $859,500 respectively. In comparison, Denver and Phoenix saw median sales prices of $370,000 and $500,000.
While San Francisco reported the highest median sales price for condos, Los Angeles reported the most sales of the West Coast markets with 528 condos closed by year-end, or approximately 16.8 percent more than the previous year. At the same time, there were 1,700 total resales, a 19.7 percent increase from the year prior.
In Seattle, 295 condominiums were sold throughout the year, a modest 2.4 percent increase from the previous year. At the same time, the total volume of resales decreased by 10 percent to 1,329 transactions. In December, resales increased 2.4 percent from a year ago.
With the most expensive market, San Francisco saw the least amount of condo sales. According to the report, year-end condo sales totaled 266, roughly 22 percent less than the same time last year. However, the region saw a higher number of condo resales, with Polaris reporting 948 total, or about 17.2 percent more than the previous year.
As the West Coast reports higher median sales prices, Polaris suggests this could be due to the region’s low inventory. This is in large part due to delayed developments and higher-than-average construction costs that have proceeded since the onstart of the COVID-19 pandemic.
“New COVID-19 strains, such as Delta and Omicron, delayed some purchase decisions. These virus variants also prompted many sellers to refrain from listing their homes, which further strained the already low inventory environment. Many new projects were delayed during COVID as investors became wary of uncertain conditions. As a result, few new condominium communities will deliver in 2022 and 2023,” Garber said.
In fact, most regions reported less inventory than in previous years. As of December, there are 998 unsold new condominiums on the market in Seattle, which is a 33.7 percent decrease from the prior year.
Los Angeles also saw a decrease in current inventory. As of the end of 2021, Polaris Pacific reported 1,048 unsold new condominiums on the market in Los Angeles, or an 11.3 percent decrease from December of 2020 when there were 1,182 new condos on the market. According to the report, most of the new unsold inventory exists between just a few condominium developments, including the 822-unit Metropolis Tower I and Tower II and the 450-unit Perla.
While Seattle and Los Angeles both reported decreased inventory, San Francisco reported a 25 percent increase in unsold new condos on the market. As of December, the region reported 1,265 unsold new condominiums on the market.
However, the limited inventory should help sell remaining product. Already, new condo developments are going quick, with all markets reporting less than 40 days on the market on average. In San Francisco, Polaris Pacific reported condos spend an average of 38 days on the market. Condos in Los Angeles also spend an average of 37 days on the market. In Seattle, that number is even lower, with most condos spending an average of 26 days on the market.
“Most markets in the West have minimal new and resale condominium inventory. In these same markets, prices for single-family homes have increased significantly over the past two years. These factors will likely result in steady condominium price appreciation,” Garber said.