Luxury buyers of San Francisco condos valued at more than $1.5 million now have a key advantage. It’s been a seller’s market in San Francisco for several years now. In fact, since 2012, sellers have had the proverbial upper hand, due to the low inventory and high demand for homes. The historically low mortgage interest rates didn’t hurt either. Indeed, most homeowners selling their homes or condos in San Francisco could expect to get their asking price or above. Countless sellers had to weigh multiple offers on their homes. For median priced homes and condos in San Francisco, that hasn’t changed a great deal yet.
However, a marked change has occurred in the luxury real estate market in San Francisco, wherein the tide has turned in favor of buyers. The luxury market in San Francisco is loosely defined as condos above $1.5 million, and single family homes above $2 million. So what caused the shift?
There are now enough luxury condos and single family homes for sale to accommodate the number of buyers, thereby mitigating the intense competition for properties (which leads to a seller’s market). To put it another way, after years of sparse inventory across all price points in San Francisco, the number of homes for sale in the luxury market are at their highest levels in nearly two years.
Much of this shift can likely be traced to the growing supply of new construction condos in buildings such as the Rockwell, 72 Townsend, 555 Fulton, Lumina and 181 Fremont . Others speculate that stock market volatility may have contributed to the shift. The reason for the shift is likely the result of numerous factors, but it’s certainly good news for luxury condo and home buyers in San Francisco.
Transitory periods in the market are common this time of year, and after a persistent period of steady year-over-year climbs in sales metrics, recent low national numbers have not fulfilled what many predicted. But on a positive note, jobless claims have also been at low levels, coming in as the lowest number since 1973. As always, every market and situation is unique, so some numbers seen in national trends may not always line up with local markets.
New Listings were down 4.4 percent for single family homes and 11.6 percent for Condo/TIC/Coop properties. Pending Sales decreased 1.5 percent for single family homes and 7.0 percent for Condo/TIC/Coop properties. The Median Sales Price was up 7.6 percent to $1,280,000 for single family homes and 15.4 percent to $1,102,500 for Condo/TIC/Coop properties. Months Supply of Inventory decreased 9.5 percent for single family units but was up 14.3 percent for Condo/TIC/Coop units.
Interest rates are an area to pay attention to as rate hikes are widely expected before the year ends. The Federal Reserve Bank has skipped two opportunities to raise rates this fall, but the final meeting in December will likely include a minor rate hike. Although we are headed into a slower time of year, as housing activity goes, there are still many nuggets of optimism to mine from monthly figures.
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