Silicon Valley condo pricing has increased in the double digits and time on the market is at an all-time low of about two weeks. There is an ongoing shortage of new condos in the region following years of apartment development, and some developers are starting to shift toward condo projects.
In Silicon Valley, condo prices increased 19.8% year over year to $810K from December to February, according to a report from Polaris Pacific. San Jose posted the highest increase in the region at 26%.
There are 1,098 new condos under construction with 518 of those in San Jose, followed by 213 in Redwood City/San Mateo. Nearly 3,000 condo units have been approved with a majority in San Jose, which approved 1,084 units, and South San Francisco/Millbrae/San Bruno area in second place with 367 units approved, according to Polaris Pacific.
Condos have been selling quickly. Time on the market has been below 60 days since 2012 with days on the market in 2017 reaching a low of about 20 days. In the first few months of 2018, condos have been selling within about 10 days, Polaris Pacific reports.
DR Horton completed sales at a 215-unit development in San Jose in April with about eight homes selling per month. Sares Regis Group of Northern California began selling condos at 1101 West along El Camino Real in Mountain View in October. Units were sold out by January, according to Polaris Pacific. Nearly 13 units were sold each month during that time.
Sares Regis Group of Northern California Senior Vice President Dave Hopkins said the Mountain View complex attracted a lot of first-time homebuyers and renters wanting to live close to work, a downtown area with restaurants and different transit options.
“People are impatiently awaiting the opportunity to buy a condo in those types of locations,” he said.
Although its newest condo complex in the works in Belmont, a 73-unit project called The Ashton, has different demographics and a different community setting, Hopkins said he is optimistic about bringing the condo flats to the market. There are simply not a lot of new homes to choose from along the peninsula, he said.
Capital markets were more interested in funding rental projects coming out of the recession, especially with job growth increasing throughout the Bay Area, causing ongoing demand for apartments, which has led to a shortage of condos throughout the region, he said.
The Ashton will be at Davey Glen and El Camino roads and provide a mix of one-, two- and three-bedroom flats and townhomes ranging from 749 SF to 1,808 SF. Amenities will includ e a fitness center, a clubroom, an outdoor patio with barbecue and a private dog run. There will be 137 parking stalls in a one-level underground parking garage and 24 parking spots above ground. About 5K SF of retail will front El Camino Real in a detached one-story building with dedicated parking. Sales are expected to begin later this year.
While Sares Regis has been largely developing apartments during the current cycle, Hopkins said he expects more condos, townhomes and for-sale projects coming from the company in the future.
“It has been a good borrowing market and the amount of high-paying jobs … creates a good market for delivering ownership housing,” he said.
Before the start of the current cycle, Sares Regis developed more for-sale projects before it pivoted to mainly apartments.
Sares Regis will remain focused within the peninsula and Silicon Valley as it has built relationships with cities and communities and professional services that help build the communities, Hopkins said.
In the last five to 10 years, the trend has been toward more sustainable developments near transit with higher density and various amenities. Hopkins said there have been a lot of opportunities along El Camino Real in various downtowns like Redwood City, Mountain View and Sunnyvale.
In addition to the condo project it is starting in Belmont, Sares Regis is working on a high-density mixed-use rental project in Sunnyvale called Cityline that will provide retail and housing near the Sunnyvale Caltrain station. He said the apartments will be done by the end of the year.
Sares Regis is actively leasing 6tenEast, a 205-unit luxury apartment complex in Sunnyvale off Fair Oaks Avenue. Construction is underway at a 225K SF luxury apartment complex with 260 units in South San Francisco. The developer is building an 83-unit complex in San Bruno with 7K SF of retail.