Low interest rates, federal benefits, modified FHA financing guidelines and low supply are elevating prices on condos in the Bay Area of California. In November, average housing prices jumped year-over-year for the second straight month in many Bay Area markets. See the following article from HousingWire for more on this.
Pacific Marketing Associates, which provides sales and marketing services for real estate developers in California, anticipates increased demand and limited supply will boost prices in the condominium market.
The prediction goes against expectations that new guidelines from the Federal Housing Agency (FHA) would constrict financing for condos.
Paul Zeger, president and founder of Pacific Marketing Associates, said several factors are pushing average sales prices up in the mid-range market, especially in the Bay Area.
Year-over-year sales jumped for the second straight month in many markets, such as Contra Costa County. Prices also increased from Oct. 2009 to Nov. 2009 by 8.5%.
“If you want new construction, demand will soon outstrip supply, but other factors such as interest rates and availability of home loans will also have an effect,” Zeger added.
Low interest rates, federal benefits and FHA loans are pushing prices when the inventory of condos priced below $729,000 is not being refilled and current sales deplete the inventory, Zeger said.
He pointed to an 87-unit boutique condo development in downtown Walnut Creek that’s one-third sold or in contract. The average price-per-square-foot is running at $467, compared to $310 for other condos in the area. In January 2010, Zeger said, the availability of FHA loans should spark an immediate sales push.
This article has been republished from HousingWire. You can also view this article at HousingWire, a mortgage and real estate news site.
