Yes, a two-bedroom condo is always preferable to a one bedroom. But what happens when you’re preapproved for a loan that puts you in one-bedroom territory? What livability and resale factors should you consider before you pursue what you can genuinely afford?
The average 1BR condo range citywide (excluding below-market-rate or senior-zoned units) was $618,996, in the time period from August-November 2012. The most popular neighborhoods where these sales took place were Eureka Valley, Pacific Heights, Downtown/Financial District, Nob/Russian Hills, the Van Ness corridor, Mission Bay, SoMa and South Beach.
A good rule of thumb is to expect to pay in the range of $400,000-$650,000 for a one bedroom in San Francisco. Amenities such as parking, washer/dryer and overall building appeal will vary depending where in this range you land.
Here are some general tips and insights I communicate to prospective buyers when it comes to making the decision whether to purchase a one-bedroom condo:
One-bedroom condos have their limitations. The lack of space for guests, an office or a nursery is clearly lacking. That’s why there’s a narrower buyer pool in this property category. From a personal standpoint, you have to come to terms with this limitation. But if you can get past that, you may be able to enjoy other amenities such as a washer/dryer or parking that you otherwise would not be able to afford in a two bedroom.
Take advantage of “1BR+” when you can. You can alleviate some of the space limitations of a one bedroom when you purchase a unit that has an area for a desk, or even a pull-out couch. I’ve seen many one-bedroom condos with unenclosed spaces that can be used for guests. These units will typically fare better in a resale situation, as well as provide more functionality.
There’s usually a solid market for one bedrooms in San Francisco. Our city attracts many young professionals, empty nesters and international buyers seeking pied-a-terres. That means there are plenty of people around who could be happy with the space provided. Similarly, one bedrooms tend to change hands more often, as owners stay an average of three- to five years and then move on to a larger home. These factors almost guarantee there will be buyers for your unit when you’re ready to sell.
Choose your neighborhood wisely. The tradeoff you’re making on space should yield you a relatively central location where one-bedroom condo inventory is the norm. And you want to also make sure you’re in a good position to rent your unit should you decide to turn it into an investment property. (One bedrooms are popular with investors due to the price point.) Stick with the hot ‘hoods that attract the aforementioned demographics, such as South Beach, SoMa, Mission Bay, the Mission, Russian Hill, Hayes Valley, and Pacific Heights. These areas are all central to public transportation and services.
Watch the HOA dues. You’re choosing a one bedroom because it’s what you can afford within a location you like. Make sure you don’t get in over your head with sky-high monthly association dues. The dues are not tax deductible, and they can increase over time. I recommend keeping them below $500/month. (It’s a challenge to pay less than that if you’re in an elevator building.)
Avoid buying a one bedroom in a house-heavy area. There are many neighborhoods in San Francisco that were developed with predominantly single-family houses. Buying a one bedroom in, say, the Mission, is a totally different proposition than purchasing such a unit in Miraloma Park or the Outer Richmond. Settle on the areas where you’d expect to see a one bedroom.