Costs soar, market cools — but lenders are still hot for S.F. condo construction
From today’s San Francisco Business Times, “Bay Area condo construction is still the darling of lenders, although the romance has soured in other parts of the country, notably Miami, Chicago and San Diego. There, hundreds of units have sat unsold on the market for three months or more, prompting lenders to back away from fresh projects. But the Bay Area, and San Francisco in particular, is still a sweet spot for more highrise development.”
“The passion for condo construction lending is unusual, given national trends pointing toward a cooling housing market and increasing difficulties for condo developers. Construction materials, including dry wall, glass and concrete, have increased roughly 30 percent over the past year, while skilled labor is increasingly tough to find and costly to procure.”
“If eager condo lenders are unusual, so, too, is the market in San Francisco.”
“Unlike Miami, where an estimated 60,000 units are in the development pipeline, San Francisco is constrained geographically. Less than 8,000 units are slated for completion within the next few years, and additional development sites are limited. The Palms, the Watermark and the Beacon, the only three projects where new condos are for sale, all report record activity in January and February, traditionally the slowest time for homebuyers. Since Jan. 1, the Beacon has averaged nearly one condo sale a day.”
Doesn’t sound anything like a market that’s crashing, to me…
As you might imagine, there are banks all over the country where the markets are much more volatile and where prices have dropped who are still looking to San Francisco as a strong housing market and are willing to invest here. I would think that they would conservatively pull out of this market long before it actually dropped, just on the economic data that so many media outlets are quoting… But the banks are still here. Perhaps there’s something to be said for watching the lenders…
I say: “San Francisco condos for everyone!”
[Even for all those bluehair buyers who will never actually live here and become part of the community, but who only come for visits to check up on the trust fund recipients and see how the Mommy and Daddy downpayment is doing]
sf jack at February 27th, 2006 at 7:11 pm ( )Love your blog. Boston is another area where the housing market is slowing down.
boston Condos
Boston-Real-Estate-Watch at March 3rd, 2006 at 2:27 pm ( )I think the Bay area in general is just starting the begining of a 2-3 year crash in residential real estate prices. People are currently spending roughly ten times their incomes for a average house, the market with increasing interest rates will not sustain this for long.
Anonymous at October 6th, 2006 at 2:46 pm ( )