San Francisco Buyer’s Market
Is San Francisco is becoming a buyer’s market?! Last week, The Luxury Marketing Council of San Francisco hosted a meeting with 5 of the Top Producers in the Bay Area to give us their insights on what we can expect in 2016. They predict 2016 is going to turn into a buyer’s market. The reason why is because the prices have gone up so much the past couple of years that seller’s have inflated valuations on their homes. Developers building new construction have inflated expectations on what they can get price per square foot. There are rumors of a couple luxury buildings being developed that want between $3,000 – $5,000 square/foot. There are still plenty of buyers and when the home is priced well it sells quickly. But the buyers now are much more selective and they are not willing to pay inflated prices. So we might see a shift as more new construction becomes available.
If you look at sales last year the highest sale was a home in Gold Coast that was 16,400 sq./ft. and it sold for $31 million. That is $1,890 per sq./ft. to own a mansion on the most prestigious block in San Francisco. Luxury homes asking $3,000 per sq./ft. have been on the market for a year and still not sold. An example would be 2635 Broadway Street. They purchased the home in December of 2013 for $5.4 million. After updating the 3,060 sq./ft. house they put it back on the market in May of 2015 asking $3,104 per sq./ft. or $9.5 million. After not getting any offers they brought it back on for $8.9 million. It still has not sold and the price has been reduced to $8.25 million. Another example is 1032 Broadway which is a 3,890 sq./ft. luxury home asking $12 million. They bought it in 2001 for $5.75 million and without making updates they are asking $3,084 per sq./ft. There seems to be a ceiling on how much one is willing to pay. If luxury properties like The Pacific expects to sell for $3,000-$5000 per square foot they might be in for a rude awaking.
Currently in District 7 there are 17 active single family homes for sale with 11 of them on the market 30 days or more. There have been 7 homes sold in District 7 in 2016. Of the 7 homes that sold this year 5 of them sold below the asking price. The average DOM was 63 days where last year it was closer to 15 days. The one property currently pending was only on the market for 2 days indicating it was priced well. The condo market has 18 active listings with an average of 42 days on the market. There have been 23 condo’s sold in 2016 and 10 of them sold below the asking price. Both markets indicate we are moving into a buyer’s market. The days on the market has increased and more properties are selling below the asking price. The condo market has a higher demand than single family homes mainly because of the price point. The average price for a condo was $1,799,000 and the average cost for a single family home is $4,622,000.