By Meghan Hall
San Francisco condominium product has become increasingly more valuable over the last ten years, with prices for for-sale product throughout the city skyrocketing. While demand has been plentiful, the market has not come close to producing enough new condominium units to balance the market. According to a July report released by Polaris Pacific, condominium development over the course of the market cycle hasn’t reached peak levels achieved in 2008, although to-date there are more than 7,000 units approved and gearing up to break ground throughout San Francisco.
The report states that in 2008, condominium development in San Francisco reached its peak, when 2,069 units were brought to market. Since then, condominium development has only come close to 2008 levels in 2016, when just over 1,500 units were delivered. In 2018, the report states, just 678 units were completed.
Polaris Pacific, in part, measures the health of the condominium market based on how many months it would take to absorb San Francisco’s current supply. Since 2008, the average months of remaining inventory has hovered at around three months, and has remained below the six-month benchmark — which indicates a balanced market — since 2012. Between 2010 and 2015, the average months of remaining inventory steadily decreased, but since 2016 has fluctuated more. Over the course of the last year, the MRI figure now sits at 1.5 months, a 35.1 percent decrease from last year.
The San Francisco condominium market still favors sellers, and currently, there are 520 unsold new condos on the market, a decrease of 11 percent from last year. There are approximately 100 resale listings. Currently selling developments include the Four Seasons Private Residences, which has close to 100 units available, and 118-unit The Avery, where approximately 21 of the units have are under contract and four of the units have sold. One Mission Bay, which has 350 units, is close to selling out entirely, states the report, as is The Harrison, which has 300 total units.
The Four Seasons Private Residences, located at 706 Mission Street, came on the market of May of this year and was developed by Westbrook Partners. The residences, which range in size from 1,075 square feet to about 4,200 square feet on average, cost between $2.3 million and $13 million per unit. The Avery, which began sales in May of the previous year but is located near the Four Seasons on Folsom Street, features slightly smaller units beginning at 964 square feet and ranging up to just over 2,000 square feet. The price ranges from $1.895 million to $4.15 million. One Mission Bay, developed by CIM Group, has even smaller units and includes studios at around 487 square feet to 3.5-bedrooms that are almost 2,000 square feet, and range in price from $582,000 to about $3 million.
Many of the developments feature amenities such as private rooftop decks, 24/7 security, swimming pools, valet parking, saunas and more.
Prices for units come at a premium but vary widely throughout San Francisco. District Ten, where the most units are planned, had the lowest median price, at $815,000 per unit, while District Seven, which includes the Cow Hollow, Marina and Pacific Heights neighborhoods, at the highest, at $1.845 million. The median price across all districts as of July 2019 was $1.25 million. Since March of 2015, the median price has remained above the $1 million mark.
How long the San Francisco market will favor sellers remains to be seen due to numerous projects in the pipeline throughout the city of San Francisco. As of July 2019, there were 1,415 new condominiums under construction, and there were 7,494 condominium units approved. The vast majority of these approved units, ones that are waiting to break ground, are concentrated in some of San Francisco’s densest neighborhoods. The two densest districts in terms of approved projects, according to Pacific Polaris, are Districts Nine and Ten. District Nine, which includes, South of Market, South Beach, Yerba Buena, Rincon Hill, Inner Mission, the Dogpatch and Bernal Heights, has 1,993 units approved.
The vast majority of approved units, however, are located in District Ten, which encompasses the Bayview, Candlestick Point, Excelsior, Hunters Point, Little Hollywood, Mission Terrace, Outer Mission, Portola, Silver Terrace and Visitacion Valley neighborhoods. There, the total number of units approved and ready to break ground is 4,742.
While Polaris Pacific’s report does not give any information on upcoming developments or their timelines, current market fundamentals point to the continued health of the San Francisco condominium market as the current demand for condo product continues to grossly outweigh supply.