Curbed SF – 1800 Van Ness (left) and 1998 Market (right) [Photos: Arquitectonica/SF Planning] VAN NESS – The 98 unit Marlow project at Van Ness and Clay broke ground early this month. The Oyster Development project is designed by Kwan Henmi and calls for an eight-story 94-unit mixed-use building with 95 parking spaces and 4,900 square feet of commercial space, as well as a four-story, 4-unit residential building with 4 parking… read more…
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Building permits for single-family homes rose 1.8 percent in December to a rate of 444,000 units compared with November, according to a joint release by the U.S. Census Bureau and the Dept. of Housing and Urban Development. Single-family housing starts rose 4.1 percent to a seasonally adjusted annual rate of 657,000.
An estimated 611,900 housing units were authorized by building permits in 2011. This is 1.2 percent above the 2010 figure of 604,600. Approximately 606,900 housing units were started in 2011. This is 3.4 percent above the 2010 figure of 586,900.
CNN Money – The Census Bureau reported an annual sales rate of 307,000 new homes last month, up 1.3 percent from a downwardly revised rate of 303,000 homes in September.
Builder: Holliday Development
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Sales of newly built, single-family homes declined 11.3 percent in November to a seasonally adjusted annual rate of 355,000 units, according to a report released WHEN? by the U.S. Commerce Dept.
“Sales of new single-family homes declined in three out of four regions in November, with only the Midwest posting a gain, of 21.4 percent. Declines of 3.3 percent, 21.1 percent, and 9.2 percent were recorded in the Northeast, South and West, respectively.The number of newly built homes on the market continued to decline in November, falling 2.1 percent to 235,000 units. This marked a 7.9-month supply at the current sales pace, according to the report.
Homebuilders pulled permits for 2,815 total housing units in October, a decline of 6 percent from September and 33 percent from October 2008, according to the Construction Industry Research Board (CIRB). Permits for single-family homes totaled 2,017, down 9 percent from the previous month and 14 percent from the same period last year. Permits for multifamily units totaled 798, an increase of 5 percent from September, but a 57 percent decline from a year ago.
During the first 10 months of the year, permits were pulled for 29,901 units, down 46 percent from the same period last year when 55,632 permits had been issued. Single-family units were down 30 percent while multifamily units were down 64 percent.
CIRB is forecasting permits will be pulled for just 36,000 total units in 2009, the lowest total on record.
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A reader asks: Do you foresee a change in the market in the next few years with all of the new developments in San Francisco? How do you think it will effect the market?
Reply: Any time there is a large increase in supply and the demand does not increase at the same pace it does effect the market. In San Francisco each area is a sub-market. So the building in the South of Market area the the 3rd street corridor is going to primarily effect those areas, especially the “older” contemporary projects. It will probably not effect the condos in Victorian or older, smaller buildings since that is a different profile of buyer.
Buyers who like the charm of Victorians and older properties usually are not willing to go into new projects. I doubt it will effect the market in established markets of the north part of the City including Pacific Heights, Marina, Cow Hollow, Presidio Heights, Russian Hill, Telegraph Hill and Nob Hill. These areas still lack adequate supply for the demand.
The buyers that I have worked with in the established areas of San Francisco want to live in those areas and are not willing to go to the newer complexes out of these areas. At the same time, the buyers who like the new projects and easy access to the 280 Freeway and the Bay Bridge want to live in that area of town. Here is an article from the San Francisco Business Times showing the residential development pipeline of projects that were under construction, or were approved and in the planning stages.
So far the demand is keeping up with the supply but this is the first time since I have been a realtor that we have seen so many units coming online at the same time. We will have to wait and see.
- Janis Stone
This question appeared in The Front Steps, a blog to which we are regular contributors. The questions they get are very thought provoking, and we have chosen to reprint some of our answers here:
A reader asked: What is their (the experts’) opinion when they see new developments start listing properties on the MLS? Is this a general sign of weakness in sales? For instance, I noticed 310 Townsend has quite a few listings on MLS and it seemed to coincide with their reduction in price and incentives.
Likewise, the Berry street properties and King St. properties in Mission Bay area also have quite a few listings on MLS and word seems to be that they are having a hard time moving their last batch of inventory…
Now I noticed the Radiance, the new property on the other side of Mission Bay… at first word was there were lots of reservations, etc but now they have a listing on MLS…. I’m wondering if that means they may start offering incentives etc.
Or maybe developers just naturally list inventory on MLS since it would reach the most people? If so, then why do they not list inventory when they first release. Thanks.
Our reply: That is a very good question and very observant. In the beginning, these types of developments have sales staff dedicated to their project so the developers are not interested in cooperating with agents because of the commission they have to pay a cooperating broker. Some even make it more difficult for other agents to be paid for clients they may have been working with for years. If the client goes to the project without their agent and is registered with the developer’s staff, then the developer will not pay the agent a commission. For this reason it is not in the MLS as they would have to abide by the SFAR rules which does not allow the developer to refuse to pay a cooperating agent whether the client had registered with the developer or not.
However, as the project winds down less units are available and may be harder to sell. Also, people who had reservations may have dropped out. So to get these last units sold, the remaining ones are put on MLS. By that time, developers are ready to move on to the next project. This can be a great time to get a good deal. At the beginning of the project developers are less willing to make concessions unless the market is slow and units are not moving. As the project is being sold out, the developer wants to sell the final units because this is where the profit is usually made. For instance, The Potrero is offering incentives for buying units now, though they have not finished the building yet are over 60% sold. Even so, they are offering a reduced price on some units and throwing in 2 years of dues, a refrigerator and washer and dryer, a value of close to $15,000.
- Janis Stone
Although this article applies to new building, the economics work the same way for resale. The media is beginning to understand that this is a cycle and not a significant one.
Here is what the December 27th report from CNN Money News entitled New Home Sales: Back from the Dead? says, “Homebuilding, one of the most battered sectors of the U.S. economy in recent months, showed surprising strength in November, according to a government report Wednesday.
“New homes sold at an annual pace of 1.05 million, up from the revised annual rate of 1.01 million in October. Economists surveyed by Briefing.com had forecast that home sales would rebound to a 1.02 million pace.
“The median average home price came in at $251,700 in November, up from the $248,500 level in October. The median price, that is, the point at which half the homes sell for more and half sell for less, had shown declines earlier in the fall because of a glut of homes available for sale on the market.” Read more…
However, there is an interesting link to Hot Spots and Cold Spots which predicts that California (including the San Francisco Bay Area) will be COLD in 2007. We’d love to show them how wrong they are!
- Avram Goldman and Mick Orton