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San Francisco Bay Area Condo Prices in the Tanker? Not so Fast. The Devil is in the Details.

May 8, 2011

Or in the case of San Francisco condo prices, the angel is in the details. San Francisco condo values have held their values better than any other Bay Area county. See chart below.

In April, the San Francisco Chronicle reported that condos or "individually owned multi-unit complexes are suffering through a perfect storm of circumstances that have undermined values and left remaining homeowners to pick up the slack for defaulting neighbors."

The article explains how distressed home sales in condo complexes (foreclosures, short sales, REOs) combined with tighter lending guidelines have made it nearly impossible for a would be home buyer to buy a condo without either an extremely large down payment or no loan at all (all cash purchase).

In other words, if there are too many renters vs owners or too many homeowners in default or an HOA balance sheet that isn't so balanced, the major banks will not lend purchase loans (not to mention the major refinance problem).

A lack of financing for prospective condo buyers puts heavy downward pressure on condo prices.

But, of course, the devil is in the details. As we often point out in this San Francisco real estate blog, it is important to read the entire article and thoroughly analyze the statistics before freaking out. Yes, the value of a condo in the San Francisco Bay Area is significantly lower than in 2007 BUT not all counties have fared the same.

Take a look at this chart. In San Francisco, the price of a resale condo is down 14.5% 2010 vs. peak. Sonoma county condo values are down 53.9% over the same period.

Whether you are a current owner of a SF condo or a prospective condo buyer in San Francisco, you can take comfort.

The San Francisco real estate market is unique. People from all over the world want to live here. We are a small peninsula with very little land left to develop. And have you tried to tear down, remodel or renovate in this town?! We have limited listing inventory (supply) in good times and bad. That keeps us somewhat insulated from major market fluctuations. Again, I am not saying that we are immune. We have suffered during this Great Recession. (For gosh sake, I sell real estate for a living!) Times have been tough. And yet, there is light at the end of the tunnel.

Prices for resale condos around the Bay Area have fallen further from their peak highs than have prices of stand-alone homes.

County 2006 2007 2008 2009 2010 Peak 2010 vs. peak
Alameda $462,500 $460,000 $320,000 $250,000 $248,250 $462,500 -46.3%
Contra Costa 420,000 429,000 280,000 185,000 180,000 429,000 -58.0
Marin 548,750 570,000 402,000 317,500 350,000 570,000 -38.6
Napa 462,000 440,000 400,000 242,000 236,500 462,000 -48.8
Santa Clara 499,000 520,000 417,500 300,000 328,773 520,000 -36.8
San Francisco 715,000 760,000 749,000 640,000 650,000 760,000 -14.5
San Mateo 535,000 550,000 450,000 393,000 375,000 550,000 -31.8
Solano 300,000 294,000 125,000 75,000 78,000 300,000 -74.0
Sonoma 380,000 359,500 220,000 174,500 175,000 380,000 -53.9
Bay Area $490,000 $508,000 $375,000 $275,000 $290,000 $508,000 -42.9%

Source: DataQuick Information Services

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/04/09/BUHC1IRH7P.DTL&ao=2#ixzz1Lm6Hvs2Z

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