Condos & Townhouses

Bayfront Court

Nowhere on the Peninsula is there a community boasting as many large condo/townhouse projects as does Foster City. I’ve actually sort of procrastinated about writing a post about this market segment because it’s shear vastness makes it a bit of a struggle trying to consolidate all of it’s facts into a coherent report on how it’s doing. There are 24 projects with 50 or more units, Redwood Shores by comparison, has 15. These developments span the price range from a high of over $1.3mil last year at Promontory Point to a 1 bedroom condo being sold short at the Admiralty for $329,888. It’s been a long held staple of real estate thought that a single family home will hold it’s value better than a condo or townhouse and thus it’s a better investment but the fact of the matter is that in a community where an entry level house is $900,000 minimum and lots of people want to live here condos/townhouses have done really well. Appreciation has been steady in Foster City over the last 10 years yet some values have fallen slightly over the last 18 months or so. I believe that to be the product of 3 things, 1. The market is experiencing a natural adjustment, 2. Foster City’s short sales have basically been in the lowest price ranges where zero down sub-prime loans were most prevalent and thus these properties have been sold at a discount to move them and 3. Association dues in some projects have risen to a point where it has, to some degree, effected desirability. Dues in some projects are hovering between $450.00 and $500.00 a month…one project is now at $735 a month. Here’s some fun facts:

30 Total number of Condos/Townhouses actively on the market in Foster City

13 Total number of them that are traditional 2 story townhouse units

14 Total number of Pending Sales

15 Total number of closed sales in the last 3 months

6 Total number that sold at or over the asking price

2.1% Average percentage of price reduction on the other 9 properties

6.8% Average price reduction across the board on Condos/Townhouses in the last year in FC.

Again, with 24 projects chiming in and considering the variations in units and their relative conditions it sure seems to me that condos and townhouses in Foster City has been, and will continue to be, a pretty darn good investment. I debated this with a mortgage broker buddy of mine recently…I think that if a buyer is qualified to $650,000 and it’s a choice between a house in San Bruno, South City or Pacifica or a condo in Foster City…it’s the Foster City condo all day long. In the long run it will hold it’s value better.

Comments

  1. The townhouses we live in, Winston Square, has really done a good job of keeping the dues lower. How would you say the value here has done in the last year or so?

  2. I’ll say they’ve done well! $160.00 a month on those dues is tremendous! I can’t think of another project anywhere that’s done as well. I would say that your value has held firm. A 3 bedroom, 2.5 bath 1640sq ft floorplan sold last fall for $788,000, the most ever paid for that type of unit, and asssuming a very similar unit comes on the market today I can see it getting that. Of course, all the variables need to be in play too…number and quality of upgrades, location in the project, is it staged right…etc. Winston Square is a great project, you’re doing great!

  3. Jennifer says:

    Would you mind clarifying the statement?
    “2. Foster City’s short sales have basically been in the lowest price ranges where zero down sub-prime loans were most prevalent…”
    Much appreciated!

  4. As prices escalated on the Peninsula over the last several years it’s sure seemed to me that the lower the price range, the more zero down, questionably financed offers I would see. I had multiple offers on listings I had in Foster City, San Bruno and South City in lower price ranges and every one of them was zero down, stated income. In retrospect I’m sure they were all subprime. Usually these loans had a short start rate that adjusted after a couple of years and as the market itself adjusted those buyers got stuck with a much higher payment…usually that they couldn’t handle. They then have to negotiate with their lender to get them to forgive some of the debt to get out. As an example…a 2 bedroom, 1.5 bath condo at the Admiralty sold in 2005 for $475,000. I actually don’t know the personal situation with this seller but I think it’s safe to assume it’s similar, or exactly like, what I described above. Anyway, it get’s listed again last August for $495,000, dropped to $488,000…and then they changed agents. The new agent listed it for $449,000 as a short sale, then $427,000, then $399,000. It sold for $400,000. Lot’s of people, and agents too, tend to avoid short sales because there can be a big unknown as to whether the lender will work with your offer…it can take months to get an answer from them. This same floor plan sold several times last year for as much as $495,000…one’s on the market right now for $487,500 and it’s been on the market for 173 days. The fact of a recent comparable at $400,000 doesn’t help them. This is kind of long winded, did it answer your question at all?

  5. Jennifer says:

    Absolutely answered my question and then some. Thank you!
    Also wanted to chime in on the Admiralty and the major reconstruction project being voted on by the residents, possibly a significant barrier for potential buyers.

  6. I hadn’t looked at disclosures over there since last fall and at that time nothing was mentioned. What are they planning on doing there? Are they talking about an assessment? Thanks for the heads up.

  7. Why do some of the condo complexes have such high HOAs, namely Spinnaker Cove & Marina Point, both in the mid to high $400’s? Is it to build up a reserve for “rainy days”?

  8. I recently looked at disclosures on a Marina Point unit that’s currently for sale and nothing really stands out as to why the dues are so high. Some of these projects are just at the age in their lifespan where work is needed…roofs, paint, dryrot and sometimes structural issues as well. The “rainy day” have already happened and the higer dues reflect expenses that have occured and were paid for out of the reserves. What I’ve always wanted to know was how a project like Winston Square can keep dues under $200.00 a month. How is Promontory Point over $700.00?

  9. Would you mind commenting on this entry on another local blog site re: short sales?

    “Short sales may not be all you think they are. You may find that you’ll end up paying past due taxes. If Home Owner Association dues are past due the association can place a lien against the property and all liens have to be cleared in order to have a clear title for a purchase.

    When a property changes hands the county tax collector gets paid. In fact, taxes rank higher in the ‘must pay’ list than the mortgage does. Its likely that taxes are going to be in arrears by the same person defaulting on their loans, and HOA dues. If you want to buy that short sale property you will have to pay those past due taxes and HOA dues because the seller has no money. Is this still sounding like a good deal to you?

    Youre much better off waiting until the property is taken back by the lender and put back on the market as a Bank Owned Property. In California the seller must pay all back taxes prior to close of escrow. The seller must clear all liens against the property, too. If the seller is a bank or mortgage company, theyre on the hook for that money and it can be sizable. You, dear buyer, get a property that is generally priced below comps in the area. That is a good buy.”

    Jim, I’d like your two cents on this. True the potential buyer can get stuck paying for past due HOA and property taxes when he/she is not on the title? I get mixed feedback on this.

  10. The most honest answer is simply this: maybe. A short sale doesn’t necessarily mean that the seller has completely given up and has stopped paying everything. The good news is that you should be able to find out up front if the property taxes and HOA dues are behind via the disclosure packet the subject property has. You can then determine how much of a risk you could have and build it into your negotiation. Frankly, if you do a study of the comps for a given property and determine that you’re going to get a significant discount, well beneath the comps, but you might need to pay a few thousand dollars to clear back taxes & dues then it’s probably worth it. To me it’s no different than if you get a great deal on a house but you have to clear up some dryrot in one of the bathrooms.
    Many Realtors don’t like short sales because lots of lenders are so incredibly slow to respond to an offer…it could be months until somebody seriously talks to you about the offer. There’s also a fear that the lender will carve up the commission when all is said and done and you’ll end up doing all that work for a song. There’s plenty of Realtor’s who’ll steer clients away from short sales for that reason alone. Bank Owned Properties are in fact better for everyone…the Bank wants to get rid of those houses and the bureaucracy is less, but the problem is there really aren’t any in Foster City. A grand total of 2 in 2007. Ultimately here’s my bottom line: Who cares how you get there? Is it a good deal? Do I have all the facts going in that will give me the best negotiating position?

  11. I live in Treasure Isle near Brewer Island Elementary. Over the past few years we’ve completed some major projects such as exterior painting, door replacements and ashpalt replacement. We’ve also worked very hard to manage our landscaping and preserve our wonderful mature trees which are the tallest in Foster City. All this and we’ve managed to keep our dues around $250/mo, and our reserves in good shape. (“At-a-boys” to our manager and Board). I think we’ve done an admirable job, but I’m concerned about the shorcomings that we might know about. Could you share any criticsms that are abuzz within the realtor community? Contractor Community? etc… Thank you. (Incidently, I’m in one of the original FC townhomes in the Six-Pack)

  12. Jim Minkey says:

    I actually think Treasure Isle is a great project, plenty of green belt space and, as you said, low HOA dues. I haven’t heard any buzz either that could be construed as negative. Everything that’s sold there this year has done pretty well. Even an overbid or 2. I think you’re in a great place.

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