Just because a luxury market segment is notated as being in buyer-advantage market territory does not mean that some listings do not sell very quickly for well over asking price, as some certainly do. Ultimately in real estate, it all depends on the specific property, and its appeal, preparation, marketing and pricing.
It can be challenging to measure appreciation in the most expensive price segments, because, firstly, there are not that many sales, and secondly, because of the huge range of sales prices with those segments ($3m to $30m for luxury houses in SF; $2m to $22m for condos and co-ops), but it may well be that their values have generally plateaued since 2015, or in some instances, ticked down a little. But it all depends on the property, and different neighborhoods are often experiencing very different market conditions in the city, some much stronger than others – especially in the luxury homes segments.
How the 2018 market plays out depends on a number of factors that are susceptible to change: financial markets, interest rates, the course of the high-tech boom, whether our big, local start-ups proceed with IPOs, political developments, and so on. . (Positive & Negative Factors in Bay Area Markets) For the time being, the San Francisco market appears to be off to a heated start characterized by robust demand. Here at Paragon, our 2018 SF sales volume in January and February was up 38% year over year, though admittedly we are outperforming the general market, which is up about 8%.
Most analyses below are based on 6-month or 12-month rolling figures as those typically provide a better illustration of the general direction of market trends (using larger data sets), as opposed to common monthly fluctuations (based on very small data sets). Each data point is these cases reflects the average or median statistic for the 6 or 12 month period.
Active Listings on Market since 2005
Sales Volumes since 2005
Overview: Ultra-Luxury Listings & Sales Volumes Houses priced $5m+; Condos, co-ops, TICs priced $3m+
Active Listings on Market since 2005
Sales Volumes since 2005
The charts above illustrate overall listing and sales volume trends for 1) in the top 2 charts, the entire luxury home market, and then, 2) in the bottom 2 charts, specifically for the more costly ultra-luxury segment. There are some significant differences between the luxury condo and house markets, but, generally speaking, luxury home sales soared since the recovery began in 2012, cooled a bit in late 2015 (financial market volatility, as well as jump in new-luxury-condo construction), and then bounced back in late 2016 and 2017. The inventory of active listings on the market has risen considerably in the past 2 years, which has appreciably altered supply and demand dynamics. As a point of comparison, in the more affordable home segments (especially for houses), supply has not risen, and indeed has declined in some areas, and inventory is still very inadequate when compared to the heated demand.
Further down in this report, we deconstruct the luxury markets further by property type, price segment (expensive vs. very expensive) and by neighborhood, and that is where some interesting and sometimes dramatically diverging trends come to light.
In this analysis, charts will sometimes use different price thresholds for the luxury designation, depending on when the chart was first created, or whether different property types are being mixed together. Right now, we consider that luxury condos, co-ops & TICs start at about $2m, and luxury houses at $3m – that is roughly the top 10% of their markets. What we call ultra-luxury adds another $1m to condo sales prices, and another $2m to houses, and constitutes about the top 2.5%.
San Francisco Luxury House Sales by Era of Construction
The great majority of SF luxury houses sold in 2017 were built prior to 1940. More than half were built before 1920.
Luxury Condo, Co-op & TIC Sales by Era of Construction
The largest group of luxury sales of these property types were condos built since 2000, many of which were newly built.
Other Paragon reports you might find interesting:
San Francisco Neighborhood Affordability
Positive & Negative Factors in Bay Area Markets
Survey of Bay Area Real Estate Markets
San Francisco & Bay Area Demographics
Paragon Main Real Estate Reports Page
These analyses were made in good faith with data from sources deemed reliable, but may contain errors and are subject to revision. It is not our intent to convince you of a particular position, but to attempt to provide straightforward data and analysis, so you can make your own informed decisions. Median and average statistics are enormous generalities: There are hundreds of different markets in San Francisco and the Bay Area, each with its own unique dynamics. Median prices and average dollar per square foot values can be and often are affected by other factors besides changes in fair market value.
