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?
Rather than continue renting or buying nothing, I highly recommend considering a one-bedroom condo purchase. You’ll begin building equity and working your way up the homeownership ladder.
The average market-rate 1BR condo citywide year-to-date is roughly $875,000. The neighborhoods where you can most frequently find inventory are Diamond Heights, Eureka Valley, Pacific Heights, Hayes Valley, Mission Dolores, Downtown/Financial District, Nob/Russian Hills, the Van Ness corridor, Mission Bay, SoMa and South Beach.
Amenities such as parking, washer/dryer and overall building appeal will vary depending upon how far above or below the average price you’re paying.
Here are some pros, cons and tips that I communicate to prospective buyers when it comes to helping them make the decision whether to purchase a one-bedroom condo:
One-bedroom condos have their space constraints. 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.
One bedrooms with alcoves or dens are preferable. 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.
One bedrooms in central neighborhoods fare better than remote ones. The trade-off 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.
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.