Land rush on new condominiums in San Francisco

June 12, 1:08 PMSF Real Estate ExaminerCece Blase

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The San Francisco Business Times recently reported what we've been seeing for awhile-- a spike in activity for new condo purchases. The sharp increase in sales comes form a convergence of low interest rates, a sweet new homes tax incentive and developers who are ready to do some serious dealing.

In many cases current listing prices at projects like Infinity, SFBlu and Arterra are over 30 percent below original pricing.  Our New Homes Sales Division, which represents many buyers in these projects, has aggressively negotiated selling prices still lower, by as much as 20-30% off current asking prices.

The downward pressure began in late 2008 when the Infinity began dropping their prices. To stay competitive other luxury developments like Blu and One Rincon had to follow suit. Lower end products like Arterra and SOMA Grand began reducing prices at the beginning of this year. The Arterra has been particularly aggressive with price drops and offers more still more concessions when buyers come to the table.

Now the sales office at the 665-unit Infinity, is writing contracts at a rate of at least one a day. The SOMA Grand has also had a run on their one-bedrooms. I was there last weekend and there were eight or nine to choose from. When I called on Thursday, they had only three left.  And the Arterra no longer shows homes by appointment on weekends because the traffic is so heavy.

Sales at SFBlu have also picked up since they aggressively reduced their prices by about 20% across the board. Sales are even picking up at th Homes on Esprit Park and at Candlestick Point.

If you're a developer, there's an upside and a downside to this new spike in sales: you love moving product, but it sucks to sell at such low prices.  Prices at buildings like the Infinity, One Rincon Hill and Blu — under $700 a square foot for some units — are well below development costs.

The one exception to the price drops is the Millennium-- this high end lifestyle condo development deems itself a market unto itself, and has persisted in holding on their prices since their across the board 20% reduction for all their buyers in contract early this year.