Condos Are Now Outselling Single-Family Homes in San Francisco
It's a first-time market shift, and maybe the trend of the future. But what's behind the change?
The San Francisco Bay Area is continuing to see record-breaking sales, bidding wars and jam-packed open houses as the 2013 real estate rally continues apace. But recent reports note that although single-family homes are selling like the proverbial hotcakes, condos are now outselling them (like even hotter hotcakes? Maybe the metaphor is breaking down. Unlike San Francisco home sales!)
This marks a change in the trend: The last five years have seen houses outselling condos. And nobody is buying TICs, probably because they can't get financing.
So what's behind this shift? We turned to Realtor Eric Turner of McGuire Real Estate, the top seller in their SOMA office and a veteran of the ongoing real-estate wars.
The easy part of the answer is that, well, there are only so many houses, and only so much land to pack them onto in the 7x7 mile area that makes up San Francisco. But condos can be piled on top of each other like Legos. "San Francisco is now building vertically, with more and more condo developments," says Turner. "A condo development could be as few as two units or as many as 400 units." So there are just more of them to sell.
Also, behavior is different in condos versus single-family homes. Once people get into a house, they tend to stay put. "The turnover rate is higher for condos," says Turner, "so you've got even more getting sold."
Part of that is due to the condo lifestyle. "Condos are often too confining for growing families," adds Turner. As the kids pile up, the urge to move to a house pushes many families from condos straight out of the city, where there's more bang for your square-footage buck.
It's like the old hyper-local joke goes: What does every San Francisco kid get for his fifth birthday? A bedroom in Marin. Ha, ha ... ha, says the woman with a 4 year old who just moved to the East Bay.
What does this mean for anxious buyers hoping to find an edge in a competitive market? Perhaps just that you should tailor your search to what you're most likely to be able to attain – knowing the competition is more fierce for houses, schedule your open houses accordingly.