Kevin V. Nguyen

On paper, the condos at the Serif and OneEleven SF buildings in Mid-Market check off a lot of boxes for a first-time home buyer in San Francisco.

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<p>On paper, the condos at the Serif and OneEleven SF buildings in Mid-Market check off a lot of boxes for a first-time home buyer in San Francisco.</p>

They’re newly constructed, have great views and are stuffed with luxe amenities. In a city known for its <a href="https://sfstandard.com/2024/04/27/why-owning-a-home-in-san-francisco-has-never-cost-more/">exorbitant housing costs</a> and <a href="https://sfstandard.com/2024/04/08/san-francisco-new-housing-permits-pace/">dismal record on housing production</a>, these are the kind of move-in ready listings that would normally be grabbed quickly, particularly with the discount that comes from buying directly from the builder.&nbsp;

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<p>They’re newly constructed, have great views and are stuffed with luxe amenities. In a city known for its <a href="https://sfstandard.com/2024/04/27/why-owning-a-home-in-san-francisco-has-never-cost-more/">exorbitant housing costs</a> and <a href="https://sfstandard.com/2024/04/08/san-francisco-new-housing-permits-pace/">dismal record on housing production</a>, these are the kind of move-in ready listings that would normally be grabbed quickly, particularly with the discount that comes from buying directly from the builder.&nbsp;</p>

But these are not normal times. In downtown, a combination of a <a href="https://sfstandard.com/2024/04/24/how-much-big-tech-pulled-back-in-san-francisco/">mass office exodus</a> and interest rate spike has eliminated a large swath of would-be buyers from the market, resulting in condo prices falling across the board.

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<p>But these are not normal times. In downtown, a combination of a <a href="https://sfstandard.com/2024/04/24/how-much-big-tech-pulled-back-in-san-francisco/">mass office exodus</a> and interest rate spike has eliminated a large swath of would-be buyers from the market, resulting in condo prices falling across the board.</p>

A quick scan on Zillow highlights a handful of similar properties—mainly centered in SoMa— with the following qualities: Newly built, never occupied, and experiencing major price cuts.&nbsp;

<p>A quick scan on Zillow highlights a handful of similar properties—mainly centered in SoMa— with the following qualities: Newly built, never occupied, and experiencing major price cuts.&nbsp;</p>

Granted, these apartment-sized dwellings might not fit the stereotypical image of the American Dream, but they are still property one can own and trade (or rent out) down the line.&nbsp;

<p>Granted, these apartment-sized dwellings might not fit the stereotypical image of the American Dream, but they are still property one can own and trade (or rent out) down the line.&nbsp;</p>

People disembark a MUNI bus on in front of Serif SF at 960 Market Street on Thursday, May 30, 2024. For San Francisco homebuyers, downtown condos are typically the best deals in town but available condominiums (condos) seem to have cooled and real estate agents are now stuck with empty units for extended periods of time.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined01_20240531-newemptycondos.jpg?w=1668" alt="A busy urban street scene with people walking, a modern multi-story building, trees, a city bus labeled &quot;Clean Air Vehicle,&quot; and scattered orange traffic cones." class="wp-image-280044"/><figcaption class="wp-element-caption">The Serif SF at 960 Market Street opened in 2022 during the latest residential market contraction, fueled by an exodus of office workers and high interest rates.</figcaption></figure>


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<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined01_20240531-newemptycondos.jpg?w=1668" alt="A busy urban street scene with people walking, a modern multi-story building, trees, a city bus labeled &quot;Clean Air Vehicle,&quot; and scattered orange traffic cones." class="wp-image-280044"/><figcaption class="wp-element-caption">The Serif SF at 960 Market Street opened in 2022 during the latest residential market contraction, fueled by an exodus of office workers and high interest rates.</figcaption></figure>

A sliding glass door opens to a solarium to the rooftop at Serif SF at 960 Market Street on Thursday, May 30, 2024. For San Francisco homebuyers, downtown condos are typically the best deals in town but available condominiums (condos) seem to have cooled and real estate agents are now stuck with empty units for extended periods of time.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined02_20240531-newemptycondos.jpg?w=2500" alt="A modern room with large windows, couches, a person standing, bookshelves, a table with chairs, and some greenery inside and outside. The room has an outdoor view." class="wp-image-280045"/><figcaption class="wp-element-caption">A sliding glass door opens to a solarium to the rooftop at Serif SF at 960 Market St. The building is stuffed with other luxury amenities including a pet spa and sharable ZipCars.</figcaption></figure>


Historically, condos have served as a sort of stepping stone for younger buyers in between renting and owning a single-family home, said Robyn Kaufman, a longtime real estate agent who specializes in downtown high-rises. “The past two years have thrown a wrench in many of those plans,” she said.&nbsp;

<p>Historically, condos have served as a sort of stepping stone for younger buyers in between renting and owning a single-family home, said Robyn Kaufman, a longtime real estate agent who specializes in downtown high-rises. “The past two years have thrown a wrench in many of those plans,” she said.&nbsp;</p>

Since mortgages are still prohibitively expensive for many because of high interest rates, motivated sellers are beginning to acknowledge it’s time to meet buyers where they are. That means price cuts of more than 25% off the top of the market.&nbsp;&nbsp;

<p>Since mortgages are still prohibitively expensive for many because of high interest rates, motivated sellers are beginning to acknowledge it’s time to meet buyers where they are. That means price cuts of more than 25% off the top of the market.&nbsp;&nbsp;</p>

Builders of these new properties are also driven to get properties off their hands. “[Individual] sellers might not have the room or motivation to budge on their price,” Kaufman said. “But a developer does. They want the building to sell out as quickly as possible so they can get out.”&nbsp;

<p>Builders of these new properties are also driven to get properties off their hands. “[Individual] sellers might not have the room or motivation to budge on their price,” Kaufman said. “But a developer does. They want the building to sell out as quickly as possible so they can get out.”&nbsp;</p>

The Mid-Market faithful: Life inside San Francisco’s office dead zone

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In real estate, timing is everything. Consider the Serif, for example, which contains 242 units. The luxury complex, with views of Market Street on one side and Turk Street on the other, opened in 2022 in the midst of a residential market contraction. Today, it is still less than half occupied. As a result, studios originally priced at around $500,000 are now being listed for about $350,000.&nbsp;

<p>In real estate, timing is everything. Consider the Serif, for example, which contains 242 units. The luxury complex, with views of Market Street on one side and Turk Street on the other, opened in 2022 in the midst of a residential market contraction. Today, it is still less than half occupied. As a result, studios originally priced at around $500,000 are now being listed for about $350,000.&nbsp;</p>

Local developer Group I conceived of the project back when an influx of new housing was built to meet the demand of tech companies flocking to Mid-Market. The Serif includes a fitness center, a pet spa, a rooftop lounge, and even ZipCars for residents to share. The white modernist flatiron-style building is also connected to the newly opened 236-room Line Hotel and a branch of LA cult-favorite café Alfred Coffee on the ground floor.&nbsp;

<p>Local developer Group I conceived of the project back when an influx of new housing was built to meet the demand of tech companies flocking to Mid-Market. The Serif includes a fitness center, a pet spa, a rooftop lounge, and even ZipCars for residents to share. The white modernist flatiron-style building is also connected to the newly opened 236-room Line Hotel and a branch of LA cult-favorite café Alfred Coffee on the ground floor.&nbsp;</p>

A Market Street-facing condo on the market at Serif SF at 960 Market Street on Thursday, May 30, 2024. For San Francisco homebuyers, downtown condos are typically the best deals in town but available condominiums (condos) seem to have cooled and real estate agents are now stuck with empty units for extended periods of time.


<figure class="wp-block-image size-large is-resized"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined06_20240531-newemptycondos.jpg?w=2500" alt="A modern living room with wooden chairs around a black table, a large window, a plant, a white cabinet, and a vibrant painting on a white wall." class="wp-image-280049" style="width:670px;height:auto"/><figcaption class="wp-element-caption">At least half of the 242 units at the Serif SF are still on the market. </figcaption></figure>


The Lumina towers seen from a soon to be on the market unit at The Metropolitan at 333 1st Street on Thursday, May 30, 2024. For San Francisco homebuyers, downtown condos are typically the best deals in town but available condominiums (condos) seem to have cooled and real estate agents are now stuck with empty units for extended periods of time.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined05_20240531-newemptycondos.jpg?w=2500" alt="The image shows several tall glass skyscrapers closely packed together, reflecting the sky and neighboring buildings. The buildings have a modern, sleek design." class="wp-image-280048"/><figcaption class="wp-element-caption">The Lumina towers seen from a soon to be on the market unit at The Metropolitan at 333 1st Street. San Francisco&#8217;s eastern waterfront transformed in the last 20 years from an industrial center.</figcaption></figure>


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined05_20240531-newemptycondos.jpg?w=2500" alt="The image shows several tall glass skyscrapers closely packed together, reflecting the sky and neighboring buildings. The buildings have a modern, sleek design." class="wp-image-280048"/><figcaption class="wp-element-caption">The Lumina towers seen from a soon to be on the market unit at The Metropolitan at 333 1st Street. San Francisco's eastern waterfront transformed in the last 20 years from an industrial center.</figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined05_20240531-newemptycondos.jpg?w=2500" alt="The image shows several tall glass skyscrapers closely packed together, reflecting the sky and neighboring buildings. The buildings have a modern, sleek design." class="wp-image-280048"/><figcaption class="wp-element-caption">The Lumina towers seen from a soon to be on the market unit at The Metropolitan at 333 1st Street. San Francisco&#8217;s eastern waterfront transformed in the last 20 years from an industrial center.</figcaption></figure>

“You’re only going to get those sorts of amenities in downtown,” said realtor Nick Spangler, who showed The Standard another brand new condo down the street at 588 Minna St.&nbsp;

<p>“You’re only going to get those sorts of amenities in downtown,” said realtor Nick Spangler, who showed The Standard another brand new condo down the street at 588 Minna St.&nbsp;</p>

The seller purchased the unit last year for $475,000 in anticipation of moving to San Francisco, but has now listed it for sale at the same price after those plans fell apart.&nbsp;

<p>The seller purchased the unit last year for $475,000 in anticipation of moving to San Francisco, but has now listed it for sale at the same price after those plans fell apart.&nbsp;</p>

The building, known as OneEleven, is a collection of 39 units, and is also only about half full. When it first opened in 2021, online reviews skewered the property for its proximity to the corner of 7th and Market Street, which has <a href="https://sfstandard.com/2023/10/27/san-francisco-drug-crisis-worst-corner-un-plaza-sfpd-enforcement/">struggled with issues around drug dealing and crime</a>.&nbsp;

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<p>The building, known as OneEleven, is a collection of 39 units, and is also only about half full. When it first opened in 2021, online reviews skewered the property for its proximity to the corner of 7th and Market Street, which has <a href="https://sfstandard.com/2023/10/27/san-francisco-drug-crisis-worst-corner-un-plaza-sfpd-enforcement/">struggled with issues around drug dealing and crime</a>.&nbsp;</p>

But the <a href="https://www.sfchronicle.com/sf/article/s-f-new-hotels-troubled-street-18465754.php">recent reopenings of three hotels</a> across the street from OneEleven late last year have improved street conditions drastically, according to Spangler. During a recent visit last week, the entrance and alleyway flanking the property were clean and clear.&nbsp;

<p>But the <a href="https://www.sfchronicle.com/sf/article/s-f-new-hotels-troubled-street-18465754.php">recent reopenings of three hotels</a> across the street from OneEleven late last year have improved street conditions drastically, according to Spangler. During a recent visit last week, the entrance and alleyway flanking the property were clean and clear.&nbsp;</p>

Looking down at Market Street from the rooftop at Serif SF located at 960 Market Street on Thursday, May 30, 2024. For San Francisco homebuyers, downtown condos are typically the best deals in town but available condominiums (condos) seem to have cooled and real estate agents are now stuck with empty units for extended periods of time.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined04_20240531-newemptycondos.jpg?w=2500" alt="This image shows a busy urban street lined with buildings, trees, and red bus lanes, with skyscrapers in the background under a clear blue sky." class="wp-image-280047"/><figcaption class="wp-element-caption">The luxury complex Serif which has spectacular views of downtown, is still less than half occupied and the studios originally priced at roughly $500,000 are now being listed near $350,000.&nbsp;</figcaption></figure>


“Everyone who’s toured recently has been pleasantly surprised,” Spangler said.

<p>“Everyone who’s toured recently has been pleasantly surprised,” Spangler said.</p>

According to Compass data, the median price for a downtown San Francisco condo right now is just shy of $1 million. In areas close to Van Ness and Civic Center, that number drops as low as $590,000. In contrast, the median price for a single-family home, depending on the neighborhood, ranges between $1 million to $6.7 million.&nbsp;

<p>According to Compass data, the median price for a downtown San Francisco condo right now is just shy of $1 million. In areas close to Van Ness and Civic Center, that number drops as low as $590,000. In contrast, the median price for a single-family home, depending on the neighborhood, ranges between $1 million to $6.7 million.&nbsp;</p>

Spangler and Kaufman are practicing what they preach to prospective buyers in choosing downtown over other neighborhoods. Spangler himself lives at One Rincon Hill and Kaufman at The Metropolitan—both skyscrapers erected in the 2000s as San Francisco’s eastern waterfront started its transformation from an industrial center.

<p>Spangler and Kaufman are practicing what they preach to prospective buyers in choosing downtown over other neighborhoods. Spangler himself lives at One Rincon Hill and Kaufman at The Metropolitan—both skyscrapers erected in the 2000s as San Francisco’s eastern waterfront started its transformation from an industrial center.</p>

Before then, the city’s condo stock was concentrated on the north side of the city, where the best views of the bay were. However, restrictive height and density limits meant new developments were scarce, thus driving sale prices and maintenance costs up as those buildings aged.&nbsp;

<p>Before then, the city’s condo stock was concentrated on the north side of the city, where the best views of the bay were. However, restrictive height and density limits meant new developments were scarce, thus driving sale prices and maintenance costs up as those buildings aged.&nbsp;</p>

Real estate agent Nicholas Spangler inside unit #705 at OneEleven at 588 Minna Street on Thursday, May 30, 2024. For San Francisco homebuyers, downtown condos are typically the best deals in town but available condominiums (condos) seem to have cooled and real estate agents are now stuck with empty units for extended periods of time.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined03_20240531-newemptycondos.jpg?w=2500" alt="A tidy and brightly lit room with modern furniture features a man standing near a window. The room includes a sofa, round coffee table, large paintings, and houseplants." class="wp-image-280046"/><figcaption class="wp-element-caption">Real estate agent Nicholas Spangler inside a new condo for sale at OneEleven at 588 Minna Street. The seller is listing the home for the same price they paid for it last year. </figcaption></figure>


Real estate agent Robyn Kaufman in a soon to be on the market unit at The Metropolitan at 333 1st Street on Thursday, May 30, 2024. For San Francisco homebuyers, downtown condos are typically the best deals in town but available condominiums (condos) seem to have cooled and real estate agents are now stuck with empty units for extended periods of time.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined08_20240531-newemptycondos.jpg?w=2500" alt="A woman stands in an empty, sunlit room with large floor-to-ceiling windows showcasing a cityscape of tall buildings, and she points towards the outside view." class="wp-image-280051"/><figcaption class="wp-element-caption">Real estate agent Robyn Kaufman in a soon to be on the market condo at The Metropolitan. In today&#8217;s market, she thinks the 1,200 square feet unit can fetch around $1.5 million. </figcaption></figure>


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined08_20240531-newemptycondos.jpg?w=2500" alt="A woman stands in an empty, sunlit room with large floor-to-ceiling windows showcasing a cityscape of tall buildings, and she points towards the outside view." class="wp-image-280051"/><figcaption class="wp-element-caption">Real estate agent Robyn Kaufman in a soon to be on the market condo at The Metropolitan. In today's market, she thinks the 1,200 square feet unit can fetch around $1.5 million. </figcaption></figure>

<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2024/05/inlined08_20240531-newemptycondos.jpg?w=2500" alt="A woman stands in an empty, sunlit room with large floor-to-ceiling windows showcasing a cityscape of tall buildings, and she points towards the outside view." class="wp-image-280051"/><figcaption class="wp-element-caption">Real estate agent Robyn Kaufman in a soon to be on the market condo at The Metropolitan. In today&#8217;s market, she thinks the 1,200 square feet unit can fetch around $1.5 million. </figcaption></figure>

Therefore, if you’re a buyer in the market, downtown is the place to go if you’re looking for the best value, Kaufman says. “Don’t just think of it as negotiating on price,” she said. “Depending on the developer, you can get credit back towards upgrades [renovations], HOA dues, or even bigger storage units.”&nbsp;

<p>Therefore, if you’re a buyer in the market, downtown is the place to go if you’re looking for the best value, Kaufman says. “Don’t just think of it as negotiating on price,” she said. “Depending on the developer, you can get credit back towards upgrades [renovations], HOA dues, or even bigger storage units.”&nbsp;</p>

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Whereas for truly motivated sellers, Kaufman said there’s a fine line between sparking a bidding war and languishing on the market.&nbsp;

<p>Whereas for truly motivated sellers, Kaufman said there’s a fine line between sparking a bidding war and languishing on the market.&nbsp;</p>

Recently, a $50,000 haircut helped move a sale along for her client at 333 Bush St., a rare commercial skyscraper with condos on the top seven floors.&nbsp;

<p>Recently, a $50,000 haircut helped move a sale along for her client at 333 Bush St., a rare commercial skyscraper with condos on the top seven floors.&nbsp;</p>

“At the end of the day, the buyer has to feel like they got a good deal too,” she said.

<p>“At the end of the day, the buyer has to feel like they got a good deal too,” she said.</p>

Brand new downtown condos are selling for deep discounts—or just sitting empty

Liz Lindqwister

Condos account for the bulk of San Francisco’s new housing inventory. But with concerns about a possible recession, legions of <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">tech layoffs</a> and a downtown corridor that closely resembles a ghost town, nobody’s willing to buy—and it looks like <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">economists’ grim prediction</a> of an epic commercial real estate crash is already unfolding in San Francisco.&nbsp;

<p>Condos account for the bulk of San Francisco’s new housing inventory. But with concerns about a possible recession, legions of <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">tech layoffs</a> and a downtown corridor that closely resembles a ghost town, nobody’s willing to buy—and it looks like <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">economists’ grim prediction</a> of an epic commercial real estate crash is already unfolding in San Francisco.&nbsp;</p>

New data from Compass Real Estate Group indicates that the city’s Greater Downtown condo market is showing the devastating effects of remote work and tech’s economic woes.&nbsp;

<p>New data from Compass Real Estate Group indicates that the city’s Greater Downtown condo market is showing the devastating effects of remote work and tech’s economic woes.&nbsp;</p>

Looking at sales of two-bedroom units sold between August and November, condo prices in SF’s Downtown and SoMa District have slipped by 16% in the past year. It is a decline that far outpaces surrounding regions: Condo sales prices in the rest of San Francisco dropped by just 7% from 2021 to 2022.&nbsp;

<p>Looking at sales of two-bedroom units sold between August and November, condo prices in SF’s Downtown and SoMa District have slipped by 16% in the past year. It is a decline that far outpaces surrounding regions: Condo sales prices in the rest of San Francisco dropped by just 7% from 2021 to 2022.&nbsp;</p>

Condo prices in SoMa/Downtown are the lowest they’ve been since 2017.&nbsp;

<p>Condo prices in SoMa/Downtown are the lowest they’ve been since 2017.&nbsp;</p>

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Other factors point to a stagnating condo market in Downtown San Francisco, where most of the city’s new housing is being built—and, conversely, the region with the <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">most number of empty condos</a> and <a href="https://sfstandard.com/business/empty-offices-are-dragging-down-san-francisco-home-prices/">empty office spaces</a>.&nbsp;

<p>Other factors point to a stagnating condo market in Downtown San Francisco, where most of the city’s new housing is being built—and, conversely, the region with the <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">most number of empty condos</a> and <a href="https://sfstandard.com/business/empty-offices-are-dragging-down-san-francisco-home-prices/">empty office spaces</a>.&nbsp;</p>

Compass data shows Downtown condos also tend to stay on the market longer, averaging 65 days on the market, compared with the rest of the city’s 40-day average. The difficulty in selling these units—combined with the high number of condo vacancies and the lack of demand for them—means that the city’s Downtown neighborhood now has a condo inventory (or “Monthly Supply of Inventory”) more than twice as high as the rest of the city.&nbsp;

<p>Compass data shows Downtown condos also tend to stay on the market longer, averaging 65 days on the market, compared with the rest of the city’s 40-day average. The difficulty in selling these units—combined with the high number of condo vacancies and the lack of demand for them—means that the city’s Downtown neighborhood now has a condo inventory (or “Monthly Supply of Inventory”) more than twice as high as the rest of the city.&nbsp;</p>

In other words, it would take double the amount of time to sell all the vacant units in the Greater Downtown region than in the rest of San Francisco.&nbsp;

<p>In other words, it would take double the amount of time to sell all the vacant units in the Greater Downtown region than in the rest of San Francisco.&nbsp;</p>

Luxury condo sales, in particular, took a huge hit during the pandemic and are now selling at a <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">fraction of their previous listing prices</a>—a statistic that is especially true in SoMa and Downtown SF.&nbsp;

<p>Luxury condo sales, in particular, took a huge hit during the pandemic and are now selling at a <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">fraction of their previous listing prices</a>—a statistic that is especially true in SoMa and Downtown SF.&nbsp;</p>

Just 19% of SoMa/Downtown condos sell over the final list price, compared with 40% of condo sales outside of this region. And the median sales price for Downtown condos sits at 4% <em>below </em>the original list price, according to Compass.

<p>Just 19% of SoMa/Downtown condos sell over the final list price, compared with 40% of condo sales outside of this region. And the median sales price for Downtown condos sits at 4% <em>below </em>the original list price, according to Compass.</p>

SF condo prices continue to drop, but it’s the worst in this neighborhood

Kevin Truong

When asked about <a href="https://www.axios.com/2022/11/28/home-prices-real-estate-housing?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosmarkets&amp;stream=business" target="_blank" rel="noreferrer noopener">a recent Axios article</a> proclaiming a broad “collapse” in housing prices nationwide—complete with the scare quotes—Patrick Carlisle, a Bay Area market analyst for real estate firm Compass, had a similarly strident retort.

<p>When asked about <a href="https://www.axios.com/2022/11/28/home-prices-real-estate-housing?utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=newsletter_axiosmarkets&amp;stream=business" target="_blank" rel="noreferrer noopener">a recent Axios article</a> proclaiming a broad “collapse” in housing prices nationwide—complete with the scare quotes—Patrick Carlisle, a Bay Area market analyst for real estate firm Compass, had a similarly strident retort.</p>

“It’s a bullshit story,” Carlisle said. “A collapse is what happened post-2008, where some Bay Area counties saw declines of up to 60% in their housing prices.”

<p>“It’s a bullshit story,” Carlisle said. “A collapse is what happened post-2008, where some Bay Area counties saw declines of up to 60% in their housing prices.”</p>

What isn’t bullshit? That San Francisco’s housing market is <a href="https://sfstandard.com/business/san-franciscos-housing-market-is-cooling-faster-than-rest-of-the-region/">cooling faster than the rest of the region</a> after reaching feverish highs during the pandemic. And <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">low demand for office space</a> is dragging down housing prices further.&nbsp;

<p>What isn’t bullshit? That San Francisco’s housing market is <a href="https://sfstandard.com/business/san-franciscos-housing-market-is-cooling-faster-than-rest-of-the-region/">cooling faster than the rest of the region</a> after reaching feverish highs during the pandemic. And <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">low demand for office space</a> is dragging down housing prices further.&nbsp;</p>

Ted Egan, the city’s chief economist, alluded to this fact <a href="https://sfstandard.com/business/blowing-a-hole-in-our-budget-sf-grapples-with-massive-fiscal-hit-of-remote-work/">in a Nov. 16 presentation</a> about the massive fiscal hit San Francisco is facing from empty offices. The pain won’t stop at office buildings, he said.&nbsp;

<p>Ted Egan, the city’s chief economist, alluded to this fact <a href="https://sfstandard.com/business/blowing-a-hole-in-our-budget-sf-grapples-with-massive-fiscal-hit-of-remote-work/">in a Nov. 16 presentation</a> about the massive fiscal hit San Francisco is facing from empty offices. The pain won’t stop at office buildings, he said.&nbsp;</p>

“If anything happens to the office sector, it ripples throughout virtually every aspect of the city&#8217;s economy,” Egan said. “Office demand drives housing demand, and if you look at San Francisco housing prices in context, they’ve seen much less growth than virtually everywhere else in the United States.”

<p>“If anything happens to the office sector, it ripples throughout virtually every aspect of the city's economy,” Egan said. “Office demand drives housing demand, and if you look at San Francisco housing prices in context, they’ve seen much less growth than virtually everywhere else in the United States.”</p>

<p>“If anything happens to the office sector, it ripples throughout virtually every aspect of the city&#8217;s economy,” Egan said. “Office demand drives housing demand, and if you look at San Francisco housing prices in context, they’ve seen much less growth than virtually everywhere else in the United States.”</p>


<h2 class="wp-block-heading" id="h-empty-condos"><strong>Empty Condos</strong></h2>


core/heading

<h2 id="h-empty-condos"><strong>Empty Condos</strong></h2>

Signs of that ripple effect are already showing up in real estate data.&nbsp;

<p>Signs of that ripple effect are already showing up in real estate data.&nbsp;</p>

Carlisle said on the Market Street corridor, where housing demand is intertwined with downtown office work, prices for two-bedroom condos are down around 16% year-over-year. That’s more than double the 7% decline seen by homes citywide.&nbsp;

<p>Carlisle said on the Market Street corridor, where housing demand is intertwined with downtown office work, prices for two-bedroom condos are down around 16% year-over-year. That’s more than double the 7% decline seen by homes citywide.&nbsp;</p>

“That area has been the big center of condo development for the last 30 years, in part because it’s basically the only place you can build a high-rise in San Francisco,” Carlisle said. “Home prices there have been <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">hit harder probably</a> than nearly anywhere else in the country.”

<p>“That area has been the big center of condo development for the last 30 years, in part because it’s basically the only place you can build a high-rise in San Francisco,” Carlisle said. “Home prices there have been <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">hit harder probably</a> than nearly anywhere else in the country.”</p>

View from the living room area at the model residence at the 181 Fremont Residences in San Francisco, Ca. on Thurs. May 10, 2018, | Michael Macor/The San Francisco Chronicle via Getty Images


<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2022/09/CondoMarketSplit092322_FEATURED-scaled.jpg" alt="" class="wp-image-78203"/><figcaption><em>The living room of the model apartment at the 181 Fremont Residences in San Francisco has a bay view. | Michael Macor/The SF Chronicle via Getty Images</em></figcaption></figure>


San Francisco is also unique among large cities in that average rents are still lower than they&nbsp;were pre-pandemic. Office workers have been slower to return in person <a href="https://sfcontroller.org/sites/default/files/Documents/Economic%20Analysis/October%20Re-Opening%20Report_final.pdf" target="_blank" rel="noreferrer noopener">compared to peer cities</a>.&nbsp;

<p>San Francisco is also unique among large cities in that average rents are still lower than they&nbsp;were pre-pandemic. Office workers have been slower to return in person <a href="https://sfcontroller.org/sites/default/files/Documents/Economic%20Analysis/October%20Re-Opening%20Report_final.pdf" target="_blank" rel="noreferrer noopener">compared to peer cities</a>.&nbsp;</p>

What’s more, a recession could hit the tech-centric <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">San Francisco Bay Area harder than most.</a> That’s because tech companies—which have relied on a decadelong flow of cheap capital—are more sensitive to a higher interest rate regime.

<p>What’s more, a recession could hit the tech-centric <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">San Francisco Bay Area harder than most.</a> That’s because tech companies—which have relied on a decadelong flow of cheap capital—are more sensitive to a higher interest rate regime.</p>

“Tech was basically providing a hose of money into the land values of the Bay Area and then with remote work that hose is spraying more evenly across the country,” said Daryl Fairweather, the chief economist at Redfin. “Now with the weak tech sector, the water going into that hose is weaker, too.”

<p>“Tech was basically providing a hose of money into the land values of the Bay Area and then with remote work that hose is spraying more evenly across the country,” said Daryl Fairweather, the chief economist at Redfin. “Now with the weak tech sector, the water going into that hose is weaker, too.”</p>

<strong>‘Sustainable Growth’&nbsp;</strong>


<h2 class="wp-block-heading"><strong>‘Sustainable Growth’&nbsp;</strong></h2>


<h2><strong>‘Sustainable Growth’&nbsp;</strong></h2>

Fairweather said that the end of the tech boom should press city leaders to focus on livability as a driver of home values and demand. That, coupled with a potential boost in housing supply <a href="https://sfstandard.com/housing-development/city-leaders-scrutinize-new-housing-plan-one-calling-it-futile/">through streamlined policies,</a> could mean “more sustainable growth.”

<p>Fairweather said that the end of the tech boom should press city leaders to focus on livability as a driver of home values and demand. That, coupled with a potential boost in housing supply <a href="https://sfstandard.com/housing-development/city-leaders-scrutinize-new-housing-plan-one-calling-it-futile/">through streamlined policies,</a> could mean “more sustainable growth.”</p>

“Remote work makes what’s happening now more of a long-term trend than a short-term trend,” Fairweather said. “If it wasn’t for remote work, the downturn of the tech sector would have still hurt the real estate market, but it would have bounced back as soon as the industry bounced back.”

<p>“Remote work makes what’s happening now more of a long-term trend than a short-term trend,” Fairweather said. “If it wasn’t for remote work, the downturn of the tech sector would have still hurt the real estate market, but it would have bounced back as soon as the industry bounced back.”</p>

Mark McHale, a real estate broker with Vanguard Properties, said that higher interest rates are turning off buyers and leaving homes sitting on the market for longer.&nbsp;

<p>Mark McHale, a real estate broker with Vanguard Properties, said that higher interest rates are turning off buyers and leaving homes sitting on the market for longer.&nbsp;</p>

McHale added that tech layoffs have served to dry up the pool of first-time buyers that typically buy condos close to downtown. Sales in the category have “trickled down to almost zero” outside of a few exceptions, according to McHale.

<p>McHale added that tech layoffs have served to dry up the pool of first-time buyers that typically buy condos close to downtown. Sales in the category have “trickled down to almost zero” outside of a few exceptions, according to McHale.</p>

Still, McHale is confident that cyclical patterns are just that. He’s holding out hope that <a href="https://www.cnbc.com/2022/11/23/mortgage-demand-rises-as-interest-rates-decline-slightly.html" target="_blank" rel="noreferrer noopener">recent interest rate declines</a> will continue and the housing market will start to bounce back next February.

<p>Still, McHale is confident that cyclical patterns are just that. He’s holding out hope that <a href="https://www.cnbc.com/2022/11/23/mortgage-demand-rises-as-interest-rates-decline-slightly.html" target="_blank" rel="noreferrer noopener">recent interest rate declines</a> will continue and the housing market will start to bounce back next February.</p>

Empty offices are dragging down San Francisco home prices

New listings of homes for sale in San Francisco are <a href="https://www.compass.com/marketing-center/editor/v2/flipbook/934cb09b-0e29-4946-b4f8-cf1bda852147" target="_blank" rel="noreferrer noopener">down more than 40% from last year</a>, a slowdown that persists even amid signs of rising buyer interest.

<p>New listings of homes for sale in San Francisco are <a href="https://www.compass.com/marketing-center/editor/v2/flipbook/934cb09b-0e29-4946-b4f8-cf1bda852147" target="_blank" rel="noreferrer noopener">down more than 40% from last year</a>, a slowdown that persists even amid signs of rising buyer interest.</p>

Patrick Carlisle, a chief market analyst at Compass, attributes this to a phenomenon he termed “the mortgage lock-in.” Essentially, people who purchased their homes with, say, a 3% interest rate are now looking at homes with mortgage rates that have more than doubled.

<p>Patrick Carlisle, a chief market analyst at Compass, attributes this to a phenomenon he termed “the mortgage lock-in.” Essentially, people who purchased their homes with, say, a 3% interest rate are now looking at homes with mortgage rates that have more than doubled.</p>

“That’s shocking to a lot of people, and that has convinced a fair number of potential home sellers not to sell,” Carlisle said.&nbsp;

<p>“That’s shocking to a lot of people, and that has convinced a fair number of potential home sellers not to sell,” Carlisle said.&nbsp;</p>

Home prices have dipped some 20% year over year in San Francisco, a data point that has caused sellers consternation alongside broader worries about the city’s economic health. But the numbers today are compared with the “frenzied, absurd, peak” the market experienced in 2022, according to Carlisle.&nbsp;

<p>Home prices have dipped some 20% year over year in San Francisco, a data point that has caused sellers consternation alongside broader worries about the city’s economic health. But the numbers today are compared with the “frenzied, absurd, peak” the market experienced in 2022, according to Carlisle.&nbsp;</p>

A fuller picture comes with more data. Home prices have been essentially flat since the pandemic hit, and they are up 81% over the last 10 years.&nbsp;

<p>A fuller picture comes with more data. Home prices have been essentially flat since the pandemic hit, and they are up 81% over the last 10 years.&nbsp;</p>

“There’s just a small group of people who happened to buy at that peak, unlucky as they might be,&#8221; Carlisle said. &#8220;But it doesn’t apply to the vast majority of homeowners.&#8221;

<p>“There’s just a small group of people who happened to buy at that peak, unlucky as they might be," Carlisle said. "But it doesn’t apply to the vast majority of homeowners."</p>

<p>“There’s just a small group of people who happened to buy at that peak, unlucky as they might be,&#8221; Carlisle said. &#8220;But it doesn’t apply to the vast majority of homeowners.&#8221;</p>

Home sales fell off a cliff in the second half of last year as interest rates rose and mortgages became more expensive. But there are signs that homebuyers are coming out of hibernation, with an increasing number of properties receiving multiple offers.

<p>Home sales fell off a cliff in the second half of last year as interest rates rose and mortgages became more expensive. But there are signs that homebuyers are coming out of hibernation, with an increasing number of properties receiving multiple offers.</p>

San Francisco has weathered numerous economic storms in the last 40 years: the 1989 Loma Prieta earthquake, the early 2000s dot-com bubble burst, the 2008 housing crisis and the <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">more recent tech bust</a>. Each period of volatility flung the real estate market into overdrive, before prices fell and markets crashed once more.&nbsp;&nbsp;

<p>San Francisco has weathered numerous economic storms in the last 40 years: the 1989 Loma Prieta earthquake, the early 2000s dot-com bubble burst, the 2008 housing crisis and the <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">more recent tech bust</a>. Each period of volatility flung the real estate market into overdrive, before prices fell and markets crashed once more.&nbsp;&nbsp;</p>

“In every time there’s an upcycle and a boom, there becomes a narrative—not just in the San Francisco Bay Area—where people come forward and say that the world has changed,” said Carlisle, who noted that boom times can lead to “irrational exuberance,” or excessive optimism about the markets.&nbsp;

<p>“In every time there’s an upcycle and a boom, there becomes a narrative—not just in the San Francisco Bay Area—where people come forward and say that the world has changed,” said Carlisle, who noted that boom times can lead to “irrational exuberance,” or excessive optimism about the markets.&nbsp;</p>

Conversely, during down cycles, the opposite unfolds into a sort of irrational pessimism, according to Carlisle.&nbsp;&nbsp;&nbsp;

<p>Conversely, during down cycles, the opposite unfolds into a sort of irrational pessimism, according to Carlisle.&nbsp;&nbsp;&nbsp;</p>

Real estate price fluctuations tend to follow broader macroeconomic trends, such as rising interest rates or the 2008 national housing market collapse. San Francisco’s proximity to Silicon Valley and its position as a tech powerhouse means the Bay Area real estate market is particularly sensitive to local tech-driven market trends as well.

<p>Real estate price fluctuations tend to follow broader macroeconomic trends, such as rising interest rates or the 2008 national housing market collapse. San Francisco’s proximity to Silicon Valley and its position as a tech powerhouse means the Bay Area real estate market is particularly sensitive to local tech-driven market trends as well.</p>

<strong>READ MORE:</strong> <a href="https://sfstandard.com/research-data/san-francisco-dot-com-bubble-burst-pandemic-tech-stocks-nasdaq/">Is San Francisco on Track for Another Dot-Com Bust?</a>

<p><strong>READ MORE:</strong> <a href="https://sfstandard.com/research-data/san-francisco-dot-com-bubble-burst-pandemic-tech-stocks-nasdaq/">Is San Francisco on Track for Another Dot-Com Bust?</a></p>

SF’s ties to dot-com startups, for example, exposed the city to financial volatility in the early 2000s as the bubble burst. Today, San Francisco’s Covid recovery has faltered after the shift to remote work gutted Downtown San Francisco and emptied office buildings.&nbsp;

<p>SF’s ties to dot-com startups, for example, exposed the city to financial volatility in the early 2000s as the bubble burst. Today, San Francisco’s Covid recovery has faltered after the shift to remote work gutted Downtown San Francisco and emptied office buildings.&nbsp;</p>

<strong>Downtown Troubles Continue</strong>


<h2 class="wp-block-heading" id="h-downtown-troubles-continue"><strong>Downtown Troubles Continue</strong></h2>


<h2 id="h-downtown-troubles-continue"><strong>Downtown Troubles Continue</strong></h2>

In this cycle, the well-publicized struggles of Downtown are playing an outsize role in the city’s real estate trends.&nbsp;

<p>In this cycle, the well-publicized struggles of Downtown are playing an outsize role in the city’s real estate trends.&nbsp;</p>

The Downtown condo market is the weakest market in the Bay Area, with prices plummeting in the latter half of last year <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">as inventory piled up</a>. The reasons are somewhat obvious: Empty office buildings, high-profile business closures, street conditions and tech layoffs have limited the buyers for these properties.

<p>The Downtown condo market is the weakest market in the Bay Area, with prices plummeting in the latter half of last year <a href="https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/">as inventory piled up</a>. The reasons are somewhat obvious: Empty office buildings, high-profile business closures, street conditions and tech layoffs have limited the buyers for these properties.</p>

But low prices and low sales also mean interested buyers can scoop up one of Downtown’s many available luxury condos and homes at prices not seen in years. Carlisle noted that despite Downtown’s problems, there have been a number of ultra-high-end sales above $6 million in the area this year.&nbsp;

<p>But low prices and low sales also mean interested buyers can scoop up one of Downtown’s many available luxury condos and homes at prices not seen in years. Carlisle noted that despite Downtown’s problems, there have been a number of ultra-high-end sales above $6 million in the area this year.&nbsp;</p>

“The median downtown condo sales price is now about the same as in early 2017,” Carlisle wrote in an analysis. “There is a wide choice of listings available both in new-condo projects and in the resale market.”&nbsp;

<p>“The median downtown condo sales price is now about the same as in early 2017,” Carlisle wrote in an analysis. “There is a wide choice of listings available both in new-condo projects and in the resale market.”&nbsp;</p>

San Francisco home listings down 40% as ‘mortgage lock-in’ scares off sellers

High-rise condos near San Francisco’s downtown—which account for the bulk of San Francisco’s newer housing stock—are piling up amid rising interest rates <a href="https://sfstandard.com/housing-development/san-francisco-home-prices-fall-amid-signs-of-a-slowdown/">and a shift </a>in the city’s housing market.

<p>High-rise condos near San Francisco’s downtown—which account for the bulk of San Francisco’s newer housing stock—are piling up amid rising interest rates <a href="https://sfstandard.com/housing-development/san-francisco-home-prices-fall-amid-signs-of-a-slowdown/">and a shift </a>in the city’s housing market.</p>

The luxury condos are another casualty of San Francisco’s <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">slow return to offices</a>, with a once-thriving social and retail scene in SoMa and Mission Bay now gasping for air. Home buyers are looking to other neighborhoods for less cookie-cutter units, more outdoor space and—frankly—more life. 

<p>The luxury condos are another casualty of San Francisco’s <a href="https://sfstandard.com/business/san-francisco-braces-for-epic-commercial-real-estate-crash/">slow return to offices</a>, with a once-thriving social and retail scene in SoMa and Mission Bay now gasping for air. Home buyers are looking to other neighborhoods for less cookie-cutter units, more outdoor space and—frankly—more life. </p>

“The amenities you can take advantage of living downtown now versus before the pandemic are much smaller,” said Laila Salma, a broker with Salma &amp; Company. “Right now it’s just not a space that’s vibrant.”&nbsp;

<p>“The amenities you can take advantage of living downtown now versus before the pandemic are much smaller,” said Laila Salma, a broker with Salma &amp; Company. “Right now it’s just not a space that’s vibrant.”&nbsp;</p>

Search Results for: downtown condos

Brand new downtown condos are selling for deep discounts—or just sitting empty

SF condo prices continue to drop, but it’s the worst in this neighborhood

Empty offices are dragging down San Francisco home prices

San Francisco home listings down 40% as ‘mortgage lock-in’ scares off sellers

SF’s downtown condos are piling up and pricing down as housing market cools