If you follow San Francisco real estate news, you might have heard about the San Francisco luxury home market slowing down in 2023. Before jumping to conclusions, let's break down what's really going on.
Danielle recently shared some of her thoughts with the SF Standard, in an article titled Why the Ultra-Rich Are Buying Way Fewer San Francisco Mansions. We wanted to share some additional background and market information with you.
First things first, let's talk numbers. After two booming years in 2021 and 2022, the high-end market for single-family homes in San Francisco—those priced at $5 million and above—has slowed down. As of late August, SF is on pace for about half as many luxury house sales in 2023 (~50) as in each of the previous two years (~100).
As you can see from the above chart via Kevin Truong of the SF Standard, San Francisco luxury home sales are really just back to pre-pandemic levels—maybe a bit higher by the end of the year.
More importantly, does that mean the entire San Francisco real estate market is crashing? Nope, not even close.
For the rest of the single-family home market in San Francisco—those priced below $5 million, plus or minus—demand is high and supply is low. In most market segments of SF, active listings are still very limited, and sellers are still seeing competitive multi-offer situations for listings that are priced and presented well.
Would you be surprised to hear that, in the middle market segment ($2–5M), the median house sales price in SF is actually up year-over-year? While a modest gain of 1%, it’s clear evidence against the gloom and doom narrative some want desperately to stick.
So, what's the deal? Why is the luxury market slowing down while the rest of the market is still thriving? It’s all about perception.
Consumer confidence plays a huge role here. Are you someone who's been around the block in San Francisco and thinks we're more or less at the bottom of the market? Then it might be a good time to invest in a premium property, while things are not quite as crazy as they were one or two years ago.
But if you're on the pessimistic side, you're probably thinking, "I'd rather keep the cash under my mattress."
Here's the (five) million-dollar question: When is the right time to buy or sell a home? The answer is... it depends. There's no one-size-fits-all answer here. It's all about what's right for you. Are you looking for an investment? A forever home? Or maybe you're just testing the waters? Whatever your situation, the key is to understand your options and make the most of them.
So, is the San Francisco luxury home market in a slump? Only compared to the two preceding, record-breaking, historically anomalous years. That doesn't mean it's all doom and gloom. Overall, the market is thriving, and the big challenges are nothing new: lack of listing inventory, lack of housing in general, high barrier to entry. The good old SF Bay Area real estate we know, warts and all.
Remember, the best time to buy or sell is when it's right for you. When that time comes, we're here to help you understand your realistic options and make the most of them. If you have any real estate questions, please don’t hesitate to reach out. Contact us today.
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