Rates remain impossibly low encouraging more buyers into the market of late and heavy rain didn’t dampen recent open house turnouts. Sentiment of most agents I’ve spoken with this week contend that our market is “Normal,” neither a buyer’s nor a seller’s market. My sister is always quick to point out that “Normal” is just a setting on the dryer. So, while there are more buyers looking than we saw over the end of summer months, the new construction projects in South Beach – The Palms and The Lansing – are aggressively offering very low introductory interest rates to sign before the end of the year as well as other incentives to lure mere lookers into becoming true buyers.
Overall the condo sales numbers show softening over the last 3 years, most precipitous between November 2004 and November 2005. And a significant shift downward fifty percent in the South Beach sales between October and November of 2005.
South Beach Condo Sales 2004 2005 2006
October 19 22 16
November 20 11 9
The multiple listing service figures only capture a part of the South Beach picture as the newly constructed projects, as well as those under construction, are not included, and most likely put a drag on the sales of existing units. Surprisingly, there are 30 pending units – indicating about 2 months of inventory given the 63 active listings (20% of which have written offers), and pointing toward a healthy sales number for December.
Rents have roared back across the City, and South Beach has been a big beneficiary.
A Business Week article I would recommend checking out is “Boom! Bust! Boom?”
Which highlights the “superstar cities” concept developed by economists Joseph E. Gyourko and Todd M. Sinai of the University of Pennsylvania’s Wharton School and Christopher J. Mayer of Columbia Business School. They argue certain cities, San Francisco included, benefit from limited supply and the fact that people from all over the world want to own in these cities. As worldwide wealth rises, there is a bidding war for homes in these locations over other US metros such as St. Louis or Nashville.
Of course we’ll be adding new bodies to the nearby neighborhoods with an influx of 1000 Old Navy and Sirna workers move into Mission Bay offices, including 240 employees relocating to the area from Colorado and New York. The moves should be completed mid-December. You can get filled in further on the future economic outlook for the commercial real estate sector at The Mayors’ Economic Forecast for San Francisco and Oakland on Wednesday, January 17, 2007.