We recently received the following question from a reader:
“Several large [SOMA] condo complexes are in phase I, II etc and claim rates of 50% – 80% sold after just a few months. Everything else in the area looks like a standstill in my opinion. What is really going on?”
In light of all the new San Francisco developments (and recent Commerce Report) we were inclined to go searching for an answer. One of our first stops, SOMA Realtor® Damion Matthews:
“Presumably the emailer is referring to The Watermark, The Beacon and The Palms, as they are the only “large” complexes in the area (if we define that as a building with, say, over 100 units). But The Beacon has been selling for a year, the Watermark for about 7 months, and The Palms for 2 months. While sales appear to have been good at all three developments, I put little weight in the claims that a sales agent makes about sales in his or her development. It’s not that they lie, but they do spin. They want to make it look like they’re selling out really fast. No surprise there. But the fact of the matter is that it’s difficult for someone outside of the sales office to really know what the state of a project’s inventory is. Sure, they can claim they’re 80% sold out… but perhaps the developer has only released a third of its inventory. Those sort of details are not handed out freely. [Editors note: unless you read SocketSite…]
As for the re-sale market in South Beach, inventory and sales levels are not drastically different than a year ago. The big change is that it does take longer for the average condo or loft to sell. That’s for a number of reasons: there’s more inventory in South Beach now than there was last year (because of the new developments), prices are higher than last year, the best units in the area tend to not be for sale, and of course people are cautious about the future of the market. However, the number of units sold this year has exceeded last year’s numbers, despite those problems.
Are re-sales in South Beach at a standstill? I don’t see that. It’s true that units with bad views take a long time to sell, but conversely those units with great views still sell quickly, and at a high price. Futhermore, people who buy those condos with great views like them and stay in them!”
Here is where we paraphrase: 1. Don’t believe everything you read (unless it’s on SocketSite…), 2. Premium properties tend to stay in demand (and hold value), and 3. Get ready for what we’re going to call a real estate “flight to quality” (more on this next week).