OK, this is sort of a light rant. Not a really big one mind you, but a bit of a rant none the less. It’s a small rant because it’s about large print media and what they do, but since large print media is so seriously in decline that I’m not as fired up as I once would have been. I think that the pounding that newspapers have taken in the last few years has made them junkies for any kind of sensational or fear driven stories that they can create so that somebody (anybody…please!) buys a newspaper. This particular story actually involves the San Francisco Chronicle, but it could certainly and easily involved any of it’s competitors or any other newspaper anywhere else in the country.

Today, actually, the Chron published a story entitled:

Bay Area Condominium Sales, Prices Tanking

Call me zany, but what I was expecting to see when I read this was a story about how Bay Area condo sales and prices were tanking. Silly me! Instead we have a story about one couple and their agent who’ve had a problem purchasing a condo in one specific project in Emeryville. Somehow, relating their experience to the whole “Bay Area” seems a tad overzealous to me. The gist of this story is that because of high foreclosure rates too many HOA dues are being left unpaid and that fact, along with the problems occurring when many projects have a larger percentage of non owner occupied units, lenders are refusing to loan on condos. The result, says the Chron, is that you need all cash to close on them and thus prices are falling through the floor.

Currently, there are 38 active condo/townhouses for sale in Foster City…and 24pending sales. That’s a pretty darn good ratio if you ask me. Of course, none of these properties are experiencing the catastrophe today’s Chron is advocating. I have a condo in escrow myself at Pointe Pacific in Daly City. That project is a wasteland compared to anything in Foster City. It’s a nice project but there’s been an abundance of short sales and foreclosures there in the last few years. The buyer on my listing has 3% down, is getting an FHA loan, is approved and we’re closing next week.

I have no doubt that the experience of these folks in today’s Chron story is true, particularly in the East Bay, but it certainly does not represent the totality of the Bay Area experience. Never mind that the story over reaches just a tad…it’s still worth placement on the sfgate home page with a photo just under their banner. Yikes!

There’s sort of a strange thing going on within the Condo/Townhouse market in Foster City right now. Actually…maybe it’s not really that strange if you think about it? It’s the fact that there are so many units that have been listed for SO long. Of the 41 active units in FC, 14 of them have been on the market for at least 100 days. That fact alone probably identifies, more than anything else, just how different the market is right now vs the boom years. Between 1999 and 2006 everything sold quickly. Now it’s harder.

Of the 14 units mentioned above we’re looking at days on market of 245, 320, 137, 336, 115, 271, 108, 146, 100, 250, 129, 118, 193 and 112. That’s a long time folks. Interestingly, only one of these listings is a short sale. (Short sales naturally tend to be on the market longer that other sales). The short sale in question is at Promontory Point where the monthly dues are a whopping $772.00 a month. Call me zany, but I think those dues are a bigger reason for it’s lengthy DOM than the short sale is. While we’re on this topic, (one that I’ve harped on before here on the blog), no fewer than 10 of the 14 listings have monthly dues higher than $430.00 a month. Actually, the dues on those 10 are $772.00 (we know which one that is!) $435.00 on 3 of them, 2 at $454.00, one at $451.00, one at $488.00, one at $603.00 and one at $717.00. If that wasn’t bad enough, large lump sum assessments are factors on 5 of them as well. Three of the fourteen units are 1 bedroom condos which tend to take awhile to sell in any market.

Interestingly though, 3 other units have low monthly dues. In one case as low as $175.00 a month. I honestly don’t know why they haven’t sold.  Here’s the thing though, there’s still 18 pending sales on condo/townhouses in Foster City. It’s not like the market is totally dead. There’s even a pending sale at The Islands (dues-$603.00), but the list price on this short sale is $499,000. Anything will sell at the right price! All these long listed homes will sell too…eventually. In the meantime, patience is a virtue?

One of the pitfalls about being a realtor and blogging about this business is the fear of getting into trouble by badmouthing somebody’s property or project. I really have tried hard not to do that…and sometimes that hasn’t been easy! At the outset here I want to sincerely say that I think Foster City has the best condo/townhouse projects on the Peninsula. They’re well designed, have great amenities and they’re in a town that has substance.

Here’s the problem, I’ve been concerned for a long time about the impact some of these projects association dues would have on their values. I’m really concerned what will happen when some of these projects begin to incorporate flood insurance into their monthly HOA dues. For the uninitiated, Foster City has projects like Winston Square that has dues of $175.00 a month. Treasure Isle at $255.00 a month, Shell Cove at $299.00 a month and Marina Green at $340.00 a month. There’s a bunch of others in this same category and they’re pretty normal if you ask me.

Then you have Bayfront Court at $435.00, Nantucket Cove at $488.00 and Marina Point at $483.00. You also have Meridian Bay at $546.00, The Islands at $603.00 and Promontory Point at $772.00. In 2005 a unit at Promontory Point sold for $1,551,400. No fewer than 16 units sold for more than $1,049,000 in those years. The most money spent at Promontory Point since 2007 was $880,000 in January of 2009. There’s a unit on the market there right now for $749,947.  I can’t think of a project, community or neighborhood in the Mid Peninsula that’s taken the type of pounding that Promontory Point has taken when it comes to value erosion. Call me zany…but do you suppose those dues have had a negative impact?

How does that translate in the real world? At 4.75% interest $772.00 a month is the equivalent of  $148,000 on a mortgage. It’s $116,000 for the Islands and their $603.00 a month dues. I’ve had many, many clients reject these projects when they found out about these dues. I think it’s understandable.

Again, the question is…what happens when they have to absorb mandatory flood insurance? How much will they go up? I know there are really great people living at these projects and I’m sure there are significant reasons for these dues being this high…it’s just a fact that they’re having a large impact on the project’s overall value.

What’s wrong with this picture? Currently, there are a total of 29 active condo/townhouse listings in Foster City. There are 22 condo/townhouse projects in Foster City, yet of the 29 active listings 11 of them are in only 3 projects…Promontory Point, Meridian Bay and Marina Point. That’s 39%. Conversely, there are currently 35 pending sales in the condo/townhouse category, a ratio that’s at it’s 2009 high by the way. There’s 5 pending sales in those complexes…or slightly under 14%.

Why the disparity, you ask? These are all nice projects and the unit’s in question are by and large in good shape. Average days on the market for these 11 units? 105. Average days on the market for all the others? 74. Why is it then that these nice units are not selling? I suggest it’s because of their high association dues. Promontory Point’s dues are $772.00 a month. Meridian Bay’s are $496.00 and Marina Point’s are $470.00.

OK, there’s others that are in that ballpark too…Isle Cove at $525.00 and The Islands at $547.00 yet there’s also places at Winston Square coming in at $245.00 and Marina Green at $308.00. Even City Homes arrives at $349.00. At least with Isle Cove and The Islands you’re most likely looking at a waterfront. The $500.00 a month range sure seems pricey to me…doesn’t it to you? What happens if flood insurance is mandated for these HOA’s? Yikes!

Seriosly, I like these projects. Meridian Bay is gorgeous…heck they all are nice developments! It’s just that the facts of the active listings would sure suggest that the market is not rushing to buy these places..and I don’t believe it has anything to do with the quality of the unit’s or the projects. It has everything to do with high HOA’s