Bay Area condos’ tight supply has buyers scrambling
Pete Carey | Mercury News | February 18, 2013 | link
The Bay Area’s market for condominiums and townhouses has seldom been hotter. Existing units are selling in record time with multiple offers, and new ones are being snapped up before there’s even a model home to see.
Just ask Niha Singh. Last month, Singh, a 27-year-old Silicon Valley computer engineer, and her husband tried to buy one of 12 units in a new townhouse development under construction in Milpitas. Even though they’d car-camped outside the developer’s office, they ended up on a waiting list.
“When we got there on Friday, there was already a line,” she said. “People were camping out, some of them for six days before the date of release.”
Across the Bay Area, buyers are fighting for a limited supply of new and existing condos. Investors have already snapped up many foreclosures and short sales and are renting them out, while owners 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. And demand has been growing.
Condos — the affordable homes chosen by many first-time buyers — have made bigger annual gains in asking price than single-family homes in all parts of the Bay Area, according to real estate website Trulia. Sales are at their highest level since late 2008, according to DataQuick, a housing information company.
“There are huge numbers of people trying to buy what’s available,” said Quincy Virgilio, a specialist in the condo and
townhouse market and vice chairman of MLS Listings. “We’re seeing incredible overbids, and multiple offers on a regular basis. A lot of them are first-time buyers trying to get into this marketplace.”Adding to the pressure for many condo shoppers, apartment rents shot up nearly 10 percent in a year, encouraging even more people to join the hunt.
“We want to start a family, and a two-bedroom near our work is $2,600,” Singh said. “We thought, why not pay it as a mortgage?”
builders are converting condos to apartments to take advantage of the rising rents, according to some real estate professionals. Also, lenders are still reluctant to finance condo projects, said Tony Sum of Silicon Valley Lofts and Condos.But new projects are under way, and condo prices are rising, too. In the last three months of 2012, median sale prices for condos were up 25 to 35 percent from the same quarter in 2011 in the East Bay, Peninsula and South Bay, according to DataQuick.
Buyers have to be nimble. The average time for a condo to sell dropped about 40 percent in December from a year earlier in Santa Clara and San Mateo counties, according to MLS Listings. In San Jose, the time it took to sell a condo or townhouse dropped from 89 days in December 2011 to 31 days in December 2012.
Condos in Castro Valley sold in 11 days in December, compared with 82 days in 2011, the Bay East Association of Realtors reported. In Pleasanton, the average number of days on the market dropped from 52 days in December 2011 to 10 days last December.
In Fremont, the number of condos for sale dropped from 112 in December 2011 to 20 in December.
“It’s as nutty as the market for single-family homes now,” said Jennifer Branchini, president-elect of the Bay Area East Realtors Association.
In Contra Costa County, condos sold in January in less than half the time it took in January 2011, according to the Contra Costa Association of Realtors.
One condo in Concord sold last week for nearly twice the list price.
“We had it listed at $125,000 and we had 28 offers,” said Barbara Safran of Land of Gold Realty in Walnut Creek. “We ended up selling it for $205,000” in an all-cash deal to buyers who plan to move in, she said.
It was on the market for a week. “It could have sold in two days,” she said.
It’s even tough in the retirement condo market.
Units at retirement community Rossmoor in Walnut Creek are selling like hot cakes. Mary Beall-Neighbor, broker-manager at Prudential California Realty in Walnut Creek, said the 55-plus development typically has about 150 listings at a time. “Yesterday we had 16. That gives you an idea. And it’s not just Rossmoor. That’s kind of the way it is everywhere,” she said.
Nancy Blum, 61, of Chicago, is finding out that you have to be fast if you want to buy a one-bedroom unit in Rossmoor. Her agent called her with 10 listings recently. Blum picked out six and flew out three days later. By that time, all the condos she could afford were gone, and only four of the 10 were left. By the end of the week, all but one of the 10 were sold.
“Three days?” Blum said. “My home in the Chicago suburbs has been on the market for two years. It’s like, ‘Are you kidding me?'”
Rising prices should eventually bring more sellers off the fence, said Mark Wong of Alain Pinel Realtors in Saratoga. “Lots of people know the market hit the bottom, interest rates are historically low and not going up soon.” That makes lots of people jump into the market.
“I think this is the year of the condo,” Wong said.