San Francisco Luxury Homes Outperform General Market
November 6, 2018
Sales of $3 million-plus homes increased 25% in September as the overall market fell 9%, Pacific Union finds
While the overall housing market in San Francisco slowed down in September, the luxury segment remained relatively strong, benefitting from the vibrant tech and financial sectors, according to an analysis released Tuesday by brokerage Pacific Union International.
Last month, 20 homes in San Francisco sold for at least $3 million, a 25% increase from September 2017. Overall, the city registered 322 residential sales, down 9% year-over-year.
Fewer lower-end home sales drove the decline. There were 95 homes transacted below the $1 million mark, falling 26% from a year ago. Home sales in the price range of $1 million to $3 million remained flat.
Last month’s data reflected a trend that has defined the San Francisco market so far this year. From January to September, the tech hub had a total of 243 sales at $3 million or higher, up 15% compared to the nine-month period in 2017. Sales across the board rose 4% to 1,051 during that same period.
“Throughout this year, we have seen strong performance in $3-million-and-plus market, partially because most of luxury buyers, from tech and finance sectors, have done well in the stock market,” said Selma Hepp, chief economist at Pacific Union International.
They are also not as sensitive to mortgage rate increases as average buyers, whose purchasing power has been weakened by about 20% due to the cost of borrowing, Ms. Hepp said.
Further, San Francisco is becoming a higher-end market than it used to be, Ms. Hepp said. There are more international and second-home buyers in the condo market, which is also driving up sales and prices.
Median sales prices in San Francisco rose 7% to $1.33 million in September, according to Ms. Hepp.
San Francisco’s luxury market had the largest price appreciation (9.5%) in the third quarter among major U.S. gateway cities, according to a Knight Frank report released Monday.
Across the Bay Area, which includes Santa Clara, San Mateo, Marin and five other counties surrounding San Francisco, there were 12 homes sold for $10 million and higher in the third quarter, according to a separate report released by Pacific Union International earlier this month.
Although it was a sharp decline from the second quarter’s 29, the number of super-luxury sales was 20% higher compared to the same period last year.