April 2013 Update
The luxury home segment in San Francisco -- typically defined as homes selling for over $1,500,000/ $2,000,000 -- makes up about 11% of the overall home market in the city by unit sales (much more by dollar volume).
In 2012, the luxury home market in the city rebounded dramatically, both in the quantity of high-end property sales and in their (escalating) prices, and so far in early 2013, there is no sign of this slowing. This recovery is occurring in every neighborhood which features luxury homes, particularly in the older prestige neighborhoods running across the north of San Francisco -- neighborhoods such as Pacific Heights, Russian Hill and Sea Cliff -- but also in the central district neighborhoods such as Noe, Eureka and Cole Valleys; the large-home district of St. Francis Wood; and the high-end luxury condo market of South Beach, SoMa and Yerba Buena. (We have separate reports for the Noe-Eureka-Cole Valleys District and the SoMa-South Beach condo market in our Neighborhood Values section.)
One interesting dynamic playing out right now in the SF luxury home market is the large increase in high-tech industry buyers with huge sums of new money at their disposal. They are joined by other affluent buyers from the financial sector, and by foreign buyers. All cash offers and very quick closes are not unusual.
If you adjust your screen view to a Zoom of 125%, the charts will be that much easier to read. In Windows systems, you can do this by pressing the Control and + keys simultaneously.
San Francisco Luxury Home Unit Sales
Luxury home sales soared in 2012, exceeding the number sold during the peak of the market in 2007-2008 -- and this doesn't include the good number of high-end sales that occurred off-market and unreported to MLS in the past year. In the 1st quarter of 2013, unit sales dropped from the height reached in the 4th quarter of 2012, but are still much higher than they were in the 1st quarter of 2012 (year over year). It's common for higher-end home sales to drop in the 1st quarter because of the holiday season dynamic, when many buyers and sellers check out until mid-January.
Average Sales Prices & Dollar per Square Foot:
Northern Prestige Neighborhood Houses
This analysis focuses on those older prestige neighborhoods running across the north of San Francisco from Sea Cliff to Telegraph Hill. Even within this area, values can vary widely, and averages are very general and approximate statistics - especially dollar per square foot when so many listings don't report square footage. But still the trendlines are correct: the huge appreciation from 1995; the crash in 2008; and the big recovery in 2012 and early 2013. This is the numbers table; the charts are further down in this report. We kept this analysis to homes selling for under $10m, because the huge sales often distort the overall statistics.
SF Luxury Home Sales:
Over, Under & At List Price
In this hot of a market, a large percentage of luxury home listings are selling quickly and for over asking price.
Sales Price to List Price Percentage, Days on Market,
Price Reductions & Expired Listings
Most of the luxury homes that do sell, sell relatively quickly at very close to or over asking price -- many of these listings are now receiving multiple offers. Those going through price reductions spend a much longer time on market and sell at a significant discount off original list price. And even in a hot market, some listings expire without selling, usually because the market deems them overpriced. (The luxury home market is one that is particularly susceptible to egregious overpricing: for example, one sale on Broadway on the "Gold Coast" in 2012 closed for $28,250,000 after being originally listed for $55,000,000.)
San Francisco Luxury Homes: Percentage of Listings Accepting Offers
This statistic is one of the clearest expressions of buyer demand vs. inventory of luxury homes for sale. This percentage is hitting the highest levels in memory.
San Francisco Luxury Homes: Average Dollar per Square Foot
Dollar per square foot values, even in the high-end, vary widely from neighborhood to neighborhood and mixing them all together in one statistic can be misleading. Also, many high-end homes don't give square footage in the listing information, so no dollar per square foot calculation is possible. The general trend is definitely upward - indeed, this chart probably understates the increase in values over the past 5 quarters.
The absolute highest dollar per square foot figures are typically paid for luxury condos in prestige buildings with staggering views and for the most prestigious mansions in neighborhoods like Pacific Heights and Russian Hill. Remember that short-term fluctuations are relatively meaningless -- they occur naturally since the "basket" of homes sold varies from month to month, quarter to quarter.
Luxury Home Sales by San Francisco Realtor District
The older prestige neighborhoods running across the north of the city from Sea Cliff through Pacific Heights to Russian & Telegraph Hills still dominate sales, but high-end sales in the greater Noe Valley/ Castro/ Cole Valley district have soared since the late nineties, and luxury condos in new developments in South Beach/ SOMA/ Yerba Buena area are also a major part of this market now. These last two areas are particular favorites of high-tech buyers, both for neighborhood ambiance and their locations close to high-tech hubs or highways south to Silicon Valley. (We have separate market reports for these 2 areas.) St. Francis Woods has been an enclave for sales of large, detached houses for quite some time.
Inventory of SF Luxury Homes for Sale
The number of new listings jumped in September 2012 with a corresponding impact on overall inventory, but then both dropped significantly in the last months of the year. Now with the new year, it is increasing once again. The luxury home inventory situation, while certainly low, is not as extremely low as the general inventory of SF homes for sale.
San Francisco Luxury Homes: Months Supply of Inventory (MSI)
The lower the MSI, the hotter the market. Current levels of MSI would typically be considered a strong "Sellers' Market." .
Average Days on Market (DOM) to Acceptance of Offer
Average days on market is not the most reliable statistic as it can be easily distorted by a few sales, but generally speaking, the hotter the market, the lower the average DOM. Competition for the best listings can be ferocious and many of the most appealing, well-priced homes are now accepting offers within 7 - 14 days of going on market -- often subsequent to a competitive bidding situation.
Largest San Francisco Home Sales by Neighborhood
2012 saw some very large home sales in San Francisco, in price and in size. As far as square footage, the largest was the "Archbishop's Mansion" on Alamo Square at 20,000 square feet.
Longer-Term Trends in Values
Sometimes it's useful to take a step back and look at longer term trends. These charts delineate average sales price (which is different from median sales price) and average dollar per square foot by neighborhood, by year, going back to 1995. Annual statistics are typically more reliable and meaningful than quarterly or monthly stats, because the body of data is so much larger and the normal fluctuations of smaller time periods get flattened out. Even then, some of these neighborhoods do not have that many sales and of the sales, many do not report square footage -- thus these statistics must be considered generalities with a fairly large margin of error.
Paragon's Market Performance in Luxury Home Sales
The key to selling any property is to price it correctly right from the start; prepare it show at its absolute best; market it comprehensively to the buyer and broker communities to create that sense of urgency which generates the strongest, cleanest offers; negotiate the purchase contract effectively and aggressively to achieve the best price and terms; and manage the due diligence and legal liability issues to the maximum advantage of one's client. If done properly, the results will show up in a number of statistics, including the sales price to original price percentage and the average days on market.
SAN FRANCISCO REALTOR DISTRICTS
District 1: Sea Cliff, Lake Street, Richmond (Inner, Central, Outer), Jordan Park/Laurel Heights, Lone Mountain
District 2: Sunset & Parkside (Inner, Central, Outer), Golden Gate Heights
District 3: Lake Shore, Lakeside, Merced Manor, Merced Heights, Ingleside, Ingleside Heights, Oceanview
District 4: St. Francis Wood, Forest Hill, West Portal, Forest Knolls, Diamond Heights, Midtown Terrace, Miraloma Park, Sunnyside, Balboa Terrace, Ingleside Terrace, Mt. Davidson Manor, Sherwood Forest, Monterey Heights, Westwood Highlands
District 5: Noe Valley, Eureka Valley/ Dolores Heights (Castro, Liberty Hill), Cole Valley, Glen Park, Corona Heights, Clarendon Heights, Ashbury Heights, Buena Vista Park, Haight Ashbury, Duboce Triangle, Twin Peaks, Mission Dolores, Parnassus Heights
District 6: Hayes Valley, North of Panhandle (NOPA), Alamo Square, Western Addition, Anza Vista, Lower Pacific Heights
District 7: Pacific Heights, Presidio Heights, Cow Hollow, Marina
District 8: Russian Hill, Nob Hill, Telegraph Hill, North Beach, Financial District, North Waterfront, Downtown, Van Ness/ Civic Center, Tenderloin
District 9: SoMa (South of Market), South Beach, Mission Bay, Potrero Hill, Dogpatch, Bernal Heights, Inner Mission, Yerba Buena
District 10: Bayview, Bayview Heights, Excelsior, Portola, Visitacion Valley, Silver Terrace, Mission Terrace, Crocker Amazon, Outer Mission
Some Realtor districts contain neighborhoods that are relatively homogeneous in general home values, such as districts 5 and 7, and others contain neighborhoods of wildly different values, such as district 8 which includes both Russian Hill and the Tenderloin.
All analyses performed in good faith using data from sources deemed reliable, but may contain errors and is subject to revision.
© Paragon Real Estate Group