New construction condos are priced eight percent lower than one year ago

Are we past the pricing peak for new construction condos in San Francisco? It looks that way, according to new data from the Mark Company that shows new condos entering the market last month were priced eight percent lower than new condos coming to market one year ago.

“The decrease is due to fierce competition for buyers, especially among high-rise developments with top-tier finishes and amenities,” according to a statement from the real estate sales and marketing firm.

New condo absorption was also down 40 percent from one year ago. The inventory of 1,200 new construction condos available last month (including the $8.895-million Lumina penthouse shown above) was 83 percent higher than it was one year ago.

The sales picture was slightly better when resales were taken into account. Prices for resales were up three percent year over year, and were up one percent between August and September 2016. The number of resale condos sold in the last year was 186, which is up 13 percent year over year, though there was a 15 percent drop in resales between August and September.

There is now 2.6 months of condo inventory on the S.F. market, which is still low (six months is considered an equilibrium between buyers and sellers) but considerably higher than we have seen in the past few years. In fact, it is the biggest backlog of condos since at least 2013, according to The Mark Company data, and is higher than other West Coast cities.

Seattle, for example, has 2.3 months of condo inventory and downtown San Diego has only 2.1 months of condo inventory. In downtown Los Angeles, on the other hand, where the new condo inventory is up 358 percent year over year, there is 4.4 months of inventory.