Getting Granular in South Beach
November 11, 2008South Beach. It’s like the San Diego of San Francisco. Everything’s new, chain stores line the pristine sidewalks, the weather’s great, and nary a pot-hole in the streets (well, except for 3rd Street, which is being torn to hell right now). The area was once a run-down industrial part of town, but thanks to the baseball stadium and San Franciscans’ newfound love for the Embarcadero, the neighborhood has taken off big time.
Of course with any neighborhood in as much flux as South Beach, challenges can occur. Developers can get overly greedy and outpace demand for homes, putting existing homeowners in a pinch. We’ve seen this happen in a lot of other markets, of which Miami is the poster child. Thankfully, for existing homeowners, San Francisco’s Board of Supervisors is very stringent on new development. It has to take place in the right places at the right times and in the right numbers.
- The SF Board of Supervisors poses for a portrait
Because of these forces at play, we were curious how current condo and loft owners are faring in the area. South Beach is mainly comprised of condos and lofts, so we left other property types out of this analysis. Also, sales from developers were largely left out. This is not by choice, but due to the fact that developers rarely put their inventory in the MLS. Why? Because they don’t want people seeing what other units in their projects have sold for. This makes perfect sense from their point of view. That’s not to say that they never put listings in the MLS… they do, but it is usually only a few out of the entire project.
So the data you’re about to look at largely reflects the condo and loft RESALE market in South Beach… not the new development market. Of course, if you’re an existing homeowner in the area, the resale market is what you should be concerned with anyway. We looked at median sales prices for condos and lofts ranging from January 1 through November 10 of each year. We capped each year at November 10 so we could include 2008 and get an even comparison.
With that said, how is South Beach holding up?
- South Beach Median Sales Prices – Click to Enlarge
The data is rather interesting. First, we see a nice ascent to the year 2001, then a bubble burst (tech crash anyone?). The recovery took 3 years and by 2004, median prices for condos and lofts rebounded to their ’01 levels. Interestingly, prices this year are as high as they’ve ever been, despite the common knowledge that new development inventory will continue to be built in large numbers. This year’s median, although the high, is pretty much the same as 2005′s. Pretty flat performance since ’05 but no implosion.
How many data points were used in calculating the medians? As you know, a median sales price is only useful if there are many data points. There were an average of 117 condo/loft sales going into each point on the chart, so we’d consider that pretty reliable. What’s your take on South Beach?
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- I told ya South Beach is like the San Diego of San Francisco!
My impression of the South Beach market is that things aren’t selling. The places I’m watching seem to be staying on the market, nice places that I’d expect to have sold, haven’t. Interestingly the prices don’t seem to be coming down with these lofts, but they haven’t sold either. Seems like everyone is holding their breath, waiting, watching but not buying, not selling. And I’m expecting prices to remain as they are on these condos and loft until April and then for them to move. Thoughts?
I agree that things are sitting on the shelf a while in that area… at least more so than in neighborhoods with tighter inventory levels.