March 17, 2016

The Mark Company Trend Sheets: February 2016

The Mark Company tracks real estate trends in the West Coast’s urban markets. Our Trend Sheets track sales, pricing and inventory for new condominiums, providing critical month-over-month and year-over-year comparisons.

February trends showed encouraging signs for near-term opportunities in urban markets on the West Coast. Following a streak of five consecutive month-over-month decreases, the San Francisco Condominium Pricing Index rose by 4 percent during February and an estimated 126 new condominium units were put into contract. While the Downtown Los Angeles Index showed some recovery after an unexpected 13 percent decrease in January, active resale inventory rose to 7.9 months of supply, making it the first major market to surpass six months of inventory since the real estate recovery began. Six months is considered the equilibrium between a buyer’s and a seller’s market. Downtown San Diego welcomed 216 new condominium units at Pacific Gate, the first new development to hit the market since The Great Recession.

February 2016 Highlights

San Francisco

The Condominium Pricing Index for San Francisco increased to $1,243 per square foot in February, compared to $1,194 per square foot in January, a positive indicator following several minor consecutive monthly declines. There are now approximately 666 new condominiums available for sale in San Francisco, and that number is expected to increase over the next few months as several new developments are planning to commence sales.

Downtown Los Angeles

The Condominium Pricing Index for Downtown Los Angeles increased 2 percent in February, recovering from an unexpected decline of 13 percent in January compared to the previous month. The combined recovery in pricing and continued demand for new construction may indicate a resiliency in the market as the traditional selling season commences.

Downtown Seattle

The Condominium Pricing Index for Downtown Seattle remains 2 percent higher than the same month last year. Condominium prices, however, decreased 8 percent in February to $784 per square foot, retreating from a peak of $853 per square foot set in January. New construction remains very low at approximately 307 available units.

Downtown San Diego

The Condominium Pricing Index for Downtown San Diego increased 2 percent in February to $702 per square foot, up from $691 per square foot in January. Bosa’s Pacific Gate began selling its 216 units and is the first new condominium development in Downtown San Diego since 2009.

“Prices edged up in San Francisco and Downtown Los Angeles, a positive indicator in markets that experienced recent declines, and a sign that prices may be stabilizing as we enter the start of the traditional selling season,” said Erin Kennelly, senior director of research, The Mark Company. “The increase in year-over-year pricing for new construction in San Francisco, Downtown Seattle and Downtown San Diego, combined with exceptionally strong sales activity in San Francisco in February, are encouraging signs for near-term opportunities in select urban markets throughout the country.”

The Condominium Pricing Index, part of The Mark Company’s monthly Trend Sheet, represents the price per square foot of a new 10th floor, 1,000-square-foot condominium. It is based on recent sales data, and uses a proprietary quantitative method to measure trends in market demand. It tracks the value of a new construction condominium without the volatility of inventory changes.

The Mark Company provides our developer clients with the tools, guidance and strategies they need to outperform the competition. Our detailed Monthly Reports and Trend Sheets deliver an accurate snapshot into the competitive landscape of key real estate markets throughout the Western United States, bringing to life the market and buyer trends that inform future strategy.

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