Home Buying in South Beach>Question Details

Gabe, Home Buyer in San Francisco, CA

What would be the effects of the new developments (ie, Millenium, Infinity, and One Rincon) have on the?

Asked by Gabe, San Francisco, CA Tue Feb 19, 2008

prices of the older condos nearby (ie, Metropolitan, Bridgeview, etc)? I wanted to purchase a condo in SB area and don't know if it is a wise decision to purchase now because of the above concern. Thank you in advance for your comments!

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Paul Hwang’s answer
Having sold $35+ million dollars worth of condos in South Beach last year, I can honestly say that all these buildings are going to add value to South Beach, until it reaches a tipping point for retail, which is good.

I think you are trying to ask is; "will inventory dilute the market?" The answer of coarse is yes, depending on demand and absorption rates. In many ways it may hinder appreciation, but it will also create a better neighborhood. If the housing market recovors and new construction is priced higher, it will tend to pull up the prices of the older construction.

In the end I think you need to look at deals on a case by case basis, otherwise you are just gambling when you generalize. In any event, take your time and find the unit that you will be most happy in. That's the best investment you will ever make.
0 votes Thank Flag Link Thu May 28, 2009
Well, all else being equal when comparing two identical projects but one is say 4 years newer than the older project, people will prefer the new project - that goes without saying. Now, not everything will be equal of course.... locations are different, amenities, floor plans, views, prices, total value proposition is different, however, new buildings will have one thing going for them over an old building, they are uh... NEW! That's not to say a NEW building will ALWAYS be better than an OLD building, it's just one factor....
0 votes Thank Flag Link Thu May 28, 2009
My 2 cents is that if you buy in SOMA or So Beach buy a condo in a building that has something intrinsic about it. The amount of properties that are coming on the market there and in other parts of the city are intended to drive the cost of housing down. This is from the Mayor's own mouth. Increase supply till the price is forced down.
Kevin's point about new construction is right on - some will always prefer new over old but many like older and many like something with character.
My advice to my clients is to stay away from the condos that feel like a hotel room with long - - long halls and very little difference inside.
Web Reference: http://www.jedlane.com
0 votes Thank Flag Link Tue Feb 19, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
Hi Gabe,
I think what you'll find is that the "audience" for each of these buildings is different, and each building has a different personality. Some of the smaller buildings in South Beach have very little turn over, such as 75 Folsom, or 1 Portside. Some buyers absolutely want something brand spanking new and if you're also asking about how all this new inventory about to hit the market will effect supply/demand balance, most of these buildings are sold save for the Millenium Blu, and the second One Rincon tower. While each building has it's own personality and price range, each unit has it's own merits as well including views, spaciousness -- The Metropolitan condos seem kind of boxy and small to me compared to The Bridgeview units; and certainly the Metropolitan is a much bigger building with many more units than the Bridgeview.
The guys here have certainly covered what a developer can offer in terms of financing and hoa -- an individual seller can also offer so many months of paid hoa dues as an incentive -- making a new purchase a little more attractive financially, perhaps. Buy the building and unit you really like at a price you can afford.

Personally I prefer buying in a resale because I can get a good feel for the community, how the hoa is working and that all the kinks are worked out of a brand new building.
0 votes Thank Flag Link Tue Feb 19, 2008

This answer is more about new construction versus resale of existing property.

Developers of new construction can provide incentives to prospective buyers that perhaps a resale cannot. For example, developers of new construction may offer pre-paid HOA fees and upgrades to the features (e.g., kitchen cabinents, flooring, etc.). This may keep their prices at the original listing level. Also, you should get a 1 year "fit and finish" warranty on any item that was installed or built as part of the construction of a unit you might purchase. Finally, there is a 10 year guarantee for certain aspects of the building construction that the developer/contractor is responsible for correcting. An example would be the sewer syste
0 votes Thank Flag Link Tue Feb 19, 2008
All the rising condos in South Beach, SOMA and the edge of the Financial District are going to have some cooling effects to the resale market, maybe more like a plateau-ing effect on pricing for a while. The developers of the new developments have some powers available to them to make their shiny new towers and complexes a viable alternative to a resale: they can offer to buy a point or points on your loan; they can offer to pay HOA fees (for a year, less or more), they can spiff the cost of an extra parking space (if you're early enough to buy) -- and they can reduce pricing to accelerate the sale of their units.

The downside to buying something new is that it has not stood the test of time, and defects or other unknown issues can come up. As a new occupant in new properties, you will be looking at standing the test of time from the begining of the timeline, whatever the results may be.

Resale units don't really have all those options because they are owned, more or less, by a private individual who is paying a mortgage and HOAs. For the resale seller, the list price will have to be competitive, even with what the developers can do. This could mean that relying on looking at recent sales on the MLS could have less meaningful information than it used to because the sale of the new development units don't get recorded there.

The upshot with buying resale is that you get to work with a full set of disclosures, you will be moving into a property that is time-proven (weathered storms, people have lived in them, an HOA is taking care of the property, defects have probably been worked out or litigated).

My 2cents.
0 votes Thank Flag Link Tue Feb 19, 2008
Gabe, you should send this guy an email: pistolpete85@hotmail.com He is an expert in that area.
0 votes Thank Flag Link Tue Feb 19, 2008
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