Downtown Condo Pricing Direction?

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Submitted by JRB on February 11, 2011 - 8:41pm

What are your thoughts on the 12-24 month outlook for downtown condo prices? I’ve seen a pick-up in sales around the $600-700K range recently, and have noticed that Bosa have increased their prices on their Bayside condos in the MLS.

I’ve also seen some huge price reductions such as units 505 and 1705 in the Grande North.

I’ve been renting in a high rise downtown and enjoy it enough to think about buying. The rent vs. buy calculation still favors renting. However, I’m wondering how much more distressed inventory will show up this year, and change the equation. What do you think?

Submitted by Dougie944 on February 11, 2011 - 8:59pm.

I would say down, but getting a significant discount on the right unit seems like a risk worth taking. I noticed those Grande prices also and they are enticing.

Submitted by UCGal on February 14, 2011 - 10:23am.

I track foreclosures in the 92101 zip on sdlookup.com. It seems like there's a steady stream of foreclosures downtown.

I track it on a per property basis when it either goes back to the bank or sells on the steps.

#505 was foreclosed on 5/12/10.
#202 foreclosed on 10/13/10
#204 foreclosed on 9/13/10
#3305 foreclosed on 7/26/10
#306 foreclosed on 5/4/10...

I think there's more pain coming downtown.

Submitted by urbanrealtor on February 14, 2011 - 10:26am.

92101 has the added issue of Vantage Point.

That is a huge increase in housing that has effectively hobbled the 92101 market for the foreseeable future.
Its not like things won't sell.
In fact most central sales are in 92101.
However, the enormous injections of inventory mean that we won't have a shortage of new desirable property for some time.
That absence of scarcity will dictate fundamentals for some time.

Submitted by SD Realtor on February 14, 2011 - 11:03am.

I would agree with you UCG. One of the issues I see with downtown inventory is that (to me) there was heavy speculative purchases made. Couple that sort of buyer with severe carrying costs dictated by high HOA and you have a nice supply of foreclosures moving forward. You still dont come close to cash flowing with downtown condos when you factor in price/hoa/property taxes.

Submitted by barnaby33 on February 14, 2011 - 2:50pm.

Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn't seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.

Submitted by wildta on February 19, 2011 - 9:02am.

barnaby33 wrote:
Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn't seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.

I concur. I live in the marina district and would never buy in the area of where vantage is located.

Submitted by davelj on February 19, 2011 - 12:23pm.

wildta wrote:
barnaby33 wrote:
Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn't seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.

I concur. I live in the marina district and would never buy in the area of where vantage is located.

I have no real opinion on Vantage Point or the area that surrounds it, but... those units are no longer for sale. Sam Zell's company bought the whole project and they are now apartments. He paid what I thought was an outrageous $340/sq ft.; nevertheless, that's 679 units off the for sale market and into the rental pool.

Generically, I think downtown prices are still about 20% too high (when comparing the cost of ownership versus renting) and I think that will correct over the next three years. The excess supply is slowly being absorbed and most, but not all, of the specuvesters have been wiped out and foreclosed on. But there are still a lot of short sales going on and there's still a lot of new, never-lived-in inventory. But there will be zero newly completed units coming on the market for at least the next five years, and so long as interest rates remain low and prices don't increase (which is unlikely) most of this inventory will get sucked up.

While I still think downtown is generically overpriced there are pockets of value here and there. I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in '05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a "steal," that seems pretty reasonable to me. And there's plenty of stuff like that if you have the patience to keep at it.

Submitted by urbanrealtor on February 19, 2011 - 11:02pm.

barnaby33 wrote:
Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn't seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.

That is true but what it does as competing sales inventory is to present an option of many, many units that have to be moved.
If you have 700 units selling at VP, they will likely do some discounting to get them moved. If you have discounted units there, then that will pull buyers away from properties that are priced lower. The logic there is that one would rather pay x+10% for a new property versus paying x for a used home as a resale.
So it will command higher prices from the same buyers.
That will impact prices up and down the tier ladder.
Let's take some examples from actual projects.
It is easy to see how Vantage Pointe could pull buyers from Acqua Vista. If you do that, you can lower all values in Acqua Vista.
This actually happened a while back and it meant that only cash buyers were able to buy there.
That can crater prices.
If you drop prices on 2,000 sqft AV penthouses, at a certain point that will have an effect on Bosa and the Grande (if for no other reason that the kind of people who can afford a $6M penthouse didn't get rich by overspending stupidly).
So its not as cut and dry as cheap-studios-off-163-drop-prices-in-Renaissance.
However, it does have a persistent ambient effect.
Too much inventory and too much distress takes its toll.

Back on the non-hypothetical planet earth, it was intelligent to not put all those units into the sale pool. It would have tripled the inventory.
As it is, it still added a large percentage of housing inventory without directly adding it to the list of potentials for buyers.
Even by offering them as rentals, doing so, reduced the scarcity (and thus the burden) for residing in downtown.
And that has an effect.

Submitted by Eugene on February 20, 2011 - 5:06am.

On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don't follow the downtown, but I wouldn't expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.

Submitted by davelj on February 20, 2011 - 9:55am.

Eugene wrote:
On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don't follow the downtown, but I wouldn't expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.

I already addressed these issues above. Vantage Point units are not for sale. Zell's company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I'm missing here). These projects broke ground in '07 or thereabouts (if memory serves). Nothing of size broke ground once '08 began (as the lenders put a halt to things about three years too late), so it's been over three years since a major project got underway. I doubt we'll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It's a bit difficult to find out exactly how many new and existing units are available downtown but I'm pretty sure I can find someone who has that data, and I'll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we're at anything resembling a "normal" level of inventory downtown simply because no new inventory will be coming on over the period.

Submitted by PCinSD on February 20, 2011 - 10:35am.

The Vantage Point conversion was discussed briefly in this recent UT article:

http://www.signonsandiego.com/news/2011/...

Submitted by bearishgurl on February 20, 2011 - 10:59am.

davelj wrote:
. . . I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in '05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a "steal," that seems pretty reasonable to me. And there's plenty of stuff like that if you have the patience to keep at it.

That sounds fantastic, davelj! Good for you to be able to strike such a deal, esp with the view! Back in the early '80's, when "Park Row" was brand new, we "pet-sat" for a friend for over a week in the neighboring (18 mo older) "Marina Park" while she was out of town. At that time, I worked in the old county courthouse. I loved using the amenities and the "commute" was a dream (1-1/2 blocks). As a condition of sale of these first two complexes downtown (the only ones for many years), the first owners had to set aside a small percentage of any profit they made upon subsequent sale to the CDCC. Is this still the case now with the first owners of units in dtn complexes? As far as I know, my friend's unit at MP is still a rental as she has long since moved to another area of the city.

Did you purchase your new unit as a principal residence and do you work dtn, davelj?

Submitted by davelj on February 20, 2011 - 11:09am.

bearishgurl wrote:
As a condition of sale of these first two complexes downtown (the only ones for many years), the first owners had to set aside a small percentage of any profit they made upon subsequent sale to the CDCC. Is this still the case now with the first owners of units in dtn complexes?

I have no idea.

bearishgurl wrote:

Did you purchase your new unit as a principal residence and do you work dtn, davelj?

Yes and yes (although I own another unit that's a rental).

Submitted by bearishgurl on February 20, 2011 - 11:51am.

davelj wrote:
I have no idea.

If you have "no idea," then this provision must have been done away with over the years, since downtown is now fully "developed." The original buyers of Marina Park and Park Row were "pioneers" of sorts as before these complexes were built, no one actually lived in the downtown "core" (except for a few scattered SFR's in Little Italy and East Village areas).

Submitted by urbanrealtor on February 20, 2011 - 10:24pm.

davelj wrote:
Eugene wrote:
On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don't follow the downtown, but I wouldn't expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.

I already addressed these issues above. Vantage Point units are not for sale. Zell's company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I'm missing here). These projects broke ground in '07 or thereabouts (if memory serves). Nothing of size broke ground once '08 began (as the lenders put a halt to things about three years too late), so it's been over three years since a major project got underway. I doubt we'll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It's a bit difficult to find out exactly how many new and existing units are available downtown but I'm pretty sure I can find someone who has that data, and I'll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we're at anything resembling a "normal" level of inventory downtown simply because no new inventory will be coming on over the period.

1: Vantage point units will totally sell.
A landlord with a pre-mapped building that cash flows positive is in no hurry to fire sale them but I would expect that at some point in the next few years, the nominal prices will cause selling to make more sense than renting.
Further, VP can sell them off slowly and at its leisure (while still pulling rents). The only question in that strategy is the cost of HOA obligations for the project owner.

2: Generally when a project hits the market, it does so with a very small MLS footprint. If every project showed up with dozens of units for sale, they would modify the market through problematic signaling. By saying that there are dozens (or hundreds) of units for sale, the perception is created that there is no urgency and thus buyers can wait or bargain. I actually think honest listing would be preferable but I don't think any strategically thinking developer would do this and I am sure banks would avoid lending on such a building.

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller's market.

Therefore, I think that we are staring a temporary equilibrium right in the face. There is some persistent downward pressure but I don't think we need to wait until 2-3 years to see "normal" (partially because I don't think there is such a thing). In sum, I would argue that what we are seeing is heaps of property being dumped onto the market there (resales, short sales, reo's, late releases) but (to modify my previous statements) that there is also a complimentary voracious appetite among buyers there. Thus we are looking at, I think, a potential inflection point. If rates remain low, the new lending innovations for attached housing remain intact, and inbound inventory does not swell by an order of magnitude (and that is a fuckton of "if's"), we could be looking at a seller's market there soon.

I have been running numbers on 92101 since 2008 and this the first time I have thought that.

Your knife catching, davelj, may have been a much better decision than you realize.

Submitted by davelj on February 21, 2011 - 10:37am.

urbanrealtor wrote:

1: Vantage point units will totally sell.
A landlord with a pre-mapped building that cash flows positive is in no hurry to fire sale them but I would expect that at some point in the next few years, the nominal prices will cause selling to make more sense than renting.
Further, VP can sell them off slowly and at its leisure (while still pulling rents). The only question in that strategy is the cost of HOA obligations for the project owner.

I'm not even thinking about VP... Zell (ERP) rarely sells his apartment buildings. I don't think this will be an issue for downtown supply for so long into the future that it's not even worth contemplating.

urbanrealtor wrote:

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller's market.

I just wonder how much inventory is *really* out there. Again, I think most of the specuvestors are gone or will be gone by year's end (2011). Now we're seeing some unemployment-related foreclosures and short sales, but those are slowing down. So, my REAL question is how many new, unoccupied, un-owned units are sitting in downtown's inventory. For example, how many units in Bayside have been purchased (to use just one example)? I wouldn't be surprised if there are 1,000 new units sitting in inventory downtown. Having said that... I just don't know. I'm pretty sure that I can get my hands on that data soon, though. But if you know these actual numbers, by all means... inquiring minds and all. I'd love to be wrong about this.

Submitted by briansd1 on February 21, 2011 - 12:59pm.

davelj wrote:
Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we're at anything resembling a "normal" level of inventory downtown simply because no new inventory will be coming on over the period.

I feel the same.

Downtown is overall an expensive place to live with HOA and parking issues. It's a place for childless professionals. Younger folks don't have the downpayments that old folks do. And mortgages are harder to get.

Add to that employment related foreclosures (as opposed to investment/speculation foreclosures) and the market still has some time before returning to normal.

Unlike city centers on the East Coast, people in San Diego don't feel compelled to live downtown. There are alternatives.

Another thing to watch for is demographic trends. Will people want to live closer to the urban core or outside? How will future gas prices affect where people choose to live?

I feel that many, older, well-to-do buyers who bought investment and second homes during the peak are tiring of downtown and would rather be elsewhere. Let's see how long they hold in the face of a protracted stagnation in prices.

Submitted by briansd1 on February 24, 2011 - 4:43pm.

It's interesting to me that there are quite a few buyers who bought at the "low" in 2008 (remember, it was a great buying opportunity after the real estate crash, but before the financial crisis).

Those buyers have run out of wherewithal already.

Here's an example.
http://www.sdlookup.com/Property-F9E589E...

And talking about inventory, listings by supposed "solid" sellers aren't what they seem.

This previously "solid" seller who would never "give away" his condo is now in distress.

http://www.sdlookup.com/Property-29FDA79...

Submitted by davelj on April 11, 2011 - 9:20pm.

davelj wrote:

urbanrealtor wrote:

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller's market.

I just wonder how much inventory is *really* out there. Again, I think most of the specuvestors are gone or will be gone by year's end (2011). Now we're seeing some unemployment-related foreclosures and short sales, but those are slowing down. So, my REAL question is how many new, unoccupied, un-owned units are sitting in downtown's inventory. For example, how many units in Bayside have been purchased (to use just one example)? I wouldn't be surprised if there are 1,000 new units sitting in inventory downtown. Having said that... I just don't know. I'm pretty sure that I can get my hands on that data soon, though. But if you know these actual numbers, by all means... inquiring minds and all. I'd love to be wrong about this.

urbanrealtor might be right about downtown. Here are the numbers I just got from a research firm (they don't have an agenda, but it doesn't mean their numbers are correct).

There are ~10,300 condo units downtown. There are currently ~325 resale units for sale. There are ~245 new developer units for sale (far fewer than I thought). There are ~75 units sold/month, so that's about 7.5 months of inventory.

On the one hand there have got to be a lot of underwater borrowers in downtown (still), so that's inventory-in-waiting. On the other hand, there have been a sh*tpile of foreclosures over the last several years so the weakest hands are out of the market. In addition, zero new units have hit the market for almost a year-and-a-half. And we won't see any new units for at least 2.5 - 3 years (that's at least a year before anyone breaks ground plus 1.5 - 2 years to completion). So... supply and demand are rapidly coming into equilibrium downtown... which is what happens when building grinds to a complete halt.

Anecdotally, where my building is concerned, we had about 25 units for sale at one time, mostly bank-owned. Now we're down to six units for sale. Almost 40% of the units have changed hands over the last three years. Anyhow, just a datapoint.

The only current building downtown relates to (1) the new library, (2) expansion of SD City College, and (3) two subsidized apartment buildings. That's it.

So, I have to agree with urbanrealtor - it doesn't look too bad downtown from a supply-demand perspective, which surprises me.

Submitted by CA renter on April 16, 2011 - 5:31pm.

davelj wrote:
davelj wrote:

urbanrealtor wrote:

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller's market.

I just wonder how much inventory is *really* out there. Again, I think most of the specuvestors are gone or will be gone by year's end (2011). Now we're seeing some unemployment-related foreclosures and short sales, but those are slowing down. So, my REAL question is how many new, unoccupied, un-owned units are sitting in downtown's inventory. For example, how many units in Bayside have been purchased (to use just one example)? I wouldn't be surprised if there are 1,000 new units sitting in inventory downtown. Having said that... I just don't know. I'm pretty sure that I can get my hands on that data soon, though. But if you know these actual numbers, by all means... inquiring minds and all. I'd love to be wrong about this.

urbanrealtor might be right about downtown. Here are the numbers I just got from a research firm (they don't have an agenda, but it doesn't mean their numbers are correct).

There are ~10,300 condo units downtown. There are currently ~325 resale units for sale. There are ~245 new developer units for sale (far fewer than I thought). There are ~75 units sold/month, so that's about 7.5 months of inventory.

On the one hand there have got to be a lot of underwater borrowers in downtown (still), so that's inventory-in-waiting. On the other hand, there have been a sh*tpile of foreclosures over the last several years so the weakest hands are out of the market. In addition, zero new units have hit the market for almost a year-and-a-half. And we won't see any new units for at least 2.5 - 3 years (that's at least a year before anyone breaks ground plus 1.5 - 2 years to completion). So... supply and demand are rapidly coming into equilibrium downtown... which is what happens when building grinds to a complete halt.

Anecdotally, where my building is concerned, we had about 25 units for sale at one time, mostly bank-owned. Now we're down to six units for sale. Almost 40% of the units have changed hands over the last three years. Anyhow, just a datapoint.

The only current building downtown relates to (1) the new library, (2) expansion of SD City College, and (3) two subsidized apartment buildings. That's it.

So, I have to agree with urbanrealtor - it doesn't look too bad downtown from a supply-demand perspective, which surprises me.

What about all the units that were converted to rentals when the developers were unable to sell them? I'd guess that as soon as the prices rise to a certain point, these will come back on the market as "for sale" inventory. I'm guessing the developers/builders are in the red every month on a lot of these units, and they'd be happy to off-load them ASAP.

You know the downtown market far better than I; what are your observations regarding these units and the possibility that the developers are losing money every month if they are being rented out?

Submitted by davelj on April 18, 2011 - 9:50am.

CA renter wrote:

What about all the units that were converted to rentals when the developers were unable to sell them? I'd guess that as soon as the prices rise to a certain point, these will come back on the market as "for sale" inventory. I'm guessing the developers/builders are in the red every month on a lot of these units, and they'd be happy to off-load them ASAP.

You know the downtown market far better than I; what are your observations regarding these units and the possibility that the developers are losing money every month if they are being rented out?

The only downtown developments I'm aware of that were originally intended to be condos, but subsequently turned into rentals, are Vantage Point, Smart Corner and Broadway Lofts. Vantage Point was sold to Zell's Equity Residential Properties and are now operated as apartments. As ERP is a wholesaler and not a retailer, these won't come onto the market for decades, if ever. ERP rarely sells and has never retailed. So, they would have to sell the building to some other operator who would then retail the units out. Given ERP's m.o. I just don't see that happening. Broadway Lofts (~80 units if memory serves) could come on the market eventually as I think that group would like to sell one day. Smart Corner is selling all of the non-studio units, and renting out the studio units. So, one would think that those studio units will one day also be for sale. Other than that, however, there aren't a lot of these units out there as a percentage of the total, so I don't see much of an impact there.

There were a lot of busted condo deals getting sold and re-financed in '08 and '09 in other parts of SD. My bank financed one in '09 in which the new owners bought the units for $110K/door (in RB). We recently asked them if their long-term plan was to sell the units as condos if the market ever came back and their response was, "No, because then we'd have to replace the cash flow economics of the deal we have, which would be very difficult." So, they're planning on holding the units as apartments indefinitely. I think there's a lot of that going on, particularly with the extremely favorable rates that many folks were able to get from Fannie/Freddie on apartment loans. If you bought well and locked in low-rate, long-term financing... you'll be hard-pressed to replace that combination again, so why sell?

Submitted by sdrealtor on April 18, 2011 - 10:19am.

DLJ
Thanx for the local insight and debunking a myth.

Submitted by briansd1 on April 26, 2011 - 1:33pm.

I think that downtown condos are approaching a floor, except for the high-end units that were bought at the peak. The high-end transactions of the peak still not been fully flushed out.

I don't see the market moving up either. So there will be a period of stagnation. The movement of interest rates will determine the stagnation period.

The question, is: do I really want to buy now and own with the carrying costs involved? Or do I want to continue renting and keep my options open. The answer is different with each potential buyer.

Submitted by davelj on January 3, 2013 - 11:52am.

davelj wrote:
davelj wrote:

urbanrealtor wrote:

3: The mean rate (taken over the course of the year) for closings in downtown is about 75/month.
The instantaneous rate of change on this is highly correlated to season (about 50 per october to march and about 100 per month april to september) but it works out the same. About 900 per year. Currently, there is about 400 active for sale in 92101 with roughly translates to about 5 months of inventory.
In a distress-heavy area, that is an impressive mean closing speed.
There are currently about 139 pendings listed in 92101. That means there are approximately 3 units for every one buyer as of today.
If you ask Jim Klinge about this, he will probably tell you that this is a healthy ratio with a just a hint of tilting toward a seller's market.

I just wonder how much inventory is *really* out there. Again, I think most of the specuvestors are gone or will be gone by year's end (2011). Now we're seeing some unemployment-related foreclosures and short sales, but those are slowing down. So, my REAL question is how many new, unoccupied, un-owned units are sitting in downtown's inventory. For example, how many units in Bayside have been purchased (to use just one example)? I wouldn't be surprised if there are 1,000 new units sitting in inventory downtown. Having said that... I just don't know. I'm pretty sure that I can get my hands on that data soon, though. But if you know these actual numbers, by all means... inquiring minds and all. I'd love to be wrong about this.

urbanrealtor might be right about downtown. Here are the numbers I just got from a research firm (they don't have an agenda, but it doesn't mean their numbers are correct).

There are ~10,300 condo units downtown. There are currently ~325 resale units for sale. There are ~245 new developer units for sale (far fewer than I thought). There are ~75 units sold/month, so that's about 7.5 months of inventory.

On the one hand there have got to be a lot of underwater borrowers in downtown (still), so that's inventory-in-waiting. On the other hand, there have been a sh*tpile of foreclosures over the last several years so the weakest hands are out of the market. In addition, zero new units have hit the market for almost a year-and-a-half. And we won't see any new units for at least 2.5 - 3 years (that's at least a year before anyone breaks ground plus 1.5 - 2 years to completion). So... supply and demand are rapidly coming into equilibrium downtown... which is what happens when building grinds to a complete halt.

Anecdotally, where my building is concerned, we had about 25 units for sale at one time, mostly bank-owned. Now we're down to six units for sale. Almost 40% of the units have changed hands over the last three years. Anyhow, just a datapoint.

The only current building downtown relates to (1) the new library, (2) expansion of SD City College, and (3) two subsidized apartment buildings. That's it.

So, I have to agree with urbanrealtor - it doesn't look too bad downtown from a supply-demand perspective, which surprises me.

With almost two years of additional hindsight (since this thread got started) it turns out that urbanrealtor was right. Downtown is back into balance and arguably now favors sellers/landlords. I thought it would take a bit longer, but happy to be wrong.

There's precious little inventory, and foreclosures are few and far between. Anecdotally, prices and rents in my building are up about 10%-15% from the trough. I believe there are three units for sale - down from 20+ at the trough.

Vantage Point is essentially fully leased up as is a newly-constructed building nearby. So, the rental inventory is tight.

There are now plans for additional condos on the table (at last) but it will likely be 2-3 years before those units are available. There is also a plan for another huge apartment building just east of Symphony Towers - ~800 units. Again, that's 2-3 years from these units coming online.

So, long story short: it appears the worst is behind for downtown for this particular cycle... although I'm sure we'll wash and repeat over the next decade; it's human nature.

Submitted by CA renter on January 3, 2013 - 6:06pm.

Thanks for the update, davelj.

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