Bay area condos’ tight supply has buyers scrambling.
And prices are going up a lot as a result.
Across
the Bay Area, buyers are fighting for a limited supply of new and existing
condos.
Several factors are combining to create this situation:
- investors have already snapped up many foreclosures and short sales and
are renting them out.
- homeowners who might sell in a typical market are either
still on the sidelines watching prices rise or are underwater and can’t afford
to sell (much fewer now than yesterday!),
- those homeowners who do want to move up cannot do so, as they question rightfully their ability to purchase a "replacement property" in this one-sided market (the lack of
bridge loans does not help),
- demand has been growing, because of the good job market in the bay area, and also - interesting trend - because many buyers who went through short sales or foreclosures are becoming
homeowners again, thanks in part to loans from the Federal Housing Administration.
- finally, as housing starts have risen in the past year or so, home sales haven’t kept up.
The gap suggests
that builders are overwhelmingly building for renters, not buyers. This trend is better studied in this
article by Nin-Hai Tseng of CNN.
Investors as well as builders did not fail to notice the significant increase in rental prices that we witnessed in the past 2 years (locally certainly, but nationwide too). In a way, we can see a small part of this phenomenon unravelling in my last blog about the
San Antonio shopping center, where for the time being the only residential units being built there are for rent.
Need to know the value of your condo? Do not hesitate to contact me,
Thanks for reading, as always!
Francis
