Kevin Truong

With all the talk of San Francisco’s downward spiral, home prices are still out of reach for many residents.&nbsp;

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<p>With all the talk of San Francisco’s downward spiral, home prices are still out of reach for many residents.&nbsp;</p>

Median home prices in San Francisco are down nearly 18% from last year—but at $1.3 million, that’s still double the median price for the country as a whole. Downtown condos have been a particularly tough sell since the pandemic, with prices <a href="https://sfstandard.com/housing-development/san-francisco-condo-real-estate-prices-continue-to-drop/">slipping more than other types of residences</a>.&nbsp;&nbsp;

<p>Median home prices in San Francisco are down nearly 18% from last year—but at $1.3 million, that’s still double the median price for the country as a whole. Downtown condos have been a particularly tough sell since the pandemic, with prices <a href="https://sfstandard.com/housing-development/san-francisco-condo-real-estate-prices-continue-to-drop/">slipping more than other types of residences</a>.&nbsp;&nbsp;</p>

The Standard set out to find bargains—relatively speaking, that is—listed at under $500,000. As you can imagine, that rapidly limited the options, but there were still quite a few smaller units that fit the bill.&nbsp;

<p>The Standard set out to find bargains—relatively speaking, that is—listed at under $500,000. As you can imagine, that rapidly limited the options, but there were still quite a few smaller units that fit the bill.&nbsp;</p>

As a note: None of the below properties are specifically for below-market-rate buyers, meaning anyone has a chance to snap them up.&nbsp;&nbsp;

<p>As a note: None of the below properties are specifically for below-market-rate buyers, meaning anyone has a chance to snap them up.&nbsp;&nbsp;</p>


<h2 class="wp-block-heading" id="h-960-market-st-518">960 Market St. #518</h2>


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<h2 id="h-960-market-st-518">960 Market St. #518</h2>

This studio condo is in Serif, a newly <a href="https://sfstandard.com/housing-development/is-this-ceiling-mounted-bed-in-a-tiny-60000-studio-the-future-of-sf-living/">constructed building in the Mid-Market neighborhood. </a>It’s no big secret that the neighborhood has faced issues in recent months, but the upside for buyers is “new, improved pricing,” according to <a href="https://www.zillow.com/homedetails/960-Market-St-518-San-Francisco-CA-94102/2064146520_zpid/" target="_blank" rel="noreferrer noopener">the property’s listing</a>. The property’s current asking price is more than $70,000 less than what the property was listed at last April.

<p>This studio condo is in Serif, a newly <a href="https://sfstandard.com/housing-development/is-this-ceiling-mounted-bed-in-a-tiny-60000-studio-the-future-of-sf-living/">constructed building in the Mid-Market neighborhood. </a>It’s no big secret that the neighborhood has faced issues in recent months, but the upside for buyers is “new, improved pricing,” according to <a href="https://www.zillow.com/homedetails/960-Market-St-518-San-Francisco-CA-94102/2064146520_zpid/" target="_blank" rel="noreferrer noopener">the property’s listing</a>. The property’s current asking price is more than $70,000 less than what the property was listed at last April.</p>


<h2 class="wp-block-heading">1000 N. Point St. #308</h2>



<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2023/06/1000NPoint308-BR4.jpg" alt="" class="wp-image-171212"/><figcaption class="wp-element-caption">A bedroom overlooking the water at 1000 N. Point St. | Courtesy Steph Dewey/Reflex Imaging</figcaption></figure>


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<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2023/06/1000NPoint308-BR4.jpg" alt="" class="wp-image-171212"/><figcaption class="wp-element-caption">A bedroom overlooking the water at 1000 N. Point St. | Courtesy Steph Dewey/Reflex Imaging</figcaption></figure>

This Russian Hill co-op has waterfront views and a private balcony at <a href="https://www.zillow.com/homedetails/1000-N-Point-St-APT-308-San-Francisco-CA-94109/80734238_zpid/" target="_blank" rel="noreferrer noopener">a listing price</a> that has dropped more than $50,000 so far this year. The property’s listing touts the layout as “perfect for a pied-a-terre or your starter home” in the 1965 building, which contains amenities such as ground-floor parking and storage and ground-floor garden with a barbecue.

<p>This Russian Hill co-op has waterfront views and a private balcony at <a href="https://www.zillow.com/homedetails/1000-N-Point-St-APT-308-San-Francisco-CA-94109/80734238_zpid/" target="_blank" rel="noreferrer noopener">a listing price</a> that has dropped more than $50,000 so far this year. The property’s listing touts the layout as “perfect for a pied-a-terre or your starter home” in the 1965 building, which contains amenities such as ground-floor parking and storage and ground-floor garden with a barbecue.</p>


<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2023/06/11.jpg" alt="" class="wp-image-171222"/><figcaption class="wp-element-caption">A bedroom at 2162 Pine St. | Courtesy Open Homes Photography&nbsp;</figcaption></figure>


A top-floor studio condo in Lower Pacific Heights, located a couple blocks away from Lafayette Park, is being listed for the first time since 2012. Its amenities include an in-unit washer and dryer and a large walk-in closet​​. The <a href="https://www.zillow.com/homedetails/2162-Pine-St-APT-203-San-Francisco-CA-94115/2119393117_zpid/" target="_blank" rel="noreferrer noopener">property’s listing</a> touts its “quiet location at the back of the building” as a plus.

<p>A top-floor studio condo in Lower Pacific Heights, located a couple blocks away from Lafayette Park, is being listed for the first time since 2012. Its amenities include an in-unit washer and dryer and a large walk-in closet​​. The <a href="https://www.zillow.com/homedetails/2162-Pine-St-APT-203-San-Francisco-CA-94115/2119393117_zpid/" target="_blank" rel="noreferrer noopener">property’s listing</a> touts its “quiet location at the back of the building” as a plus.</p>


<h2 class="wp-block-heading">334 Alemany Blvd. #3</h2>


An actual enclosed bedroom for under half a million dollars? That’s the promise of this Bernal Heights property, which has been testing the market for the past few months. When it was initially listed in 2020, it came above our $500,000 threshold but has since dropped in price. The <a href="https://www.zillow.com/homedetails/334-Alemany-Blvd-APT-3-San-Francisco-CA-94110/2122855931_zpid/" target="_blank" rel="noreferrer noopener">property’s listing</a> touts a parking space and its location within walking distance of the Alemany Farmers Market.&nbsp;

<p>An actual enclosed bedroom for under half a million dollars? That’s the promise of this Bernal Heights property, which has been testing the market for the past few months. When it was initially listed in 2020, it came above our $500,000 threshold but has since dropped in price. The <a href="https://www.zillow.com/homedetails/334-Alemany-Blvd-APT-3-San-Francisco-CA-94110/2122855931_zpid/" target="_blank" rel="noreferrer noopener">property’s listing</a> touts a parking space and its location within walking distance of the Alemany Farmers Market.&nbsp;</p>


<h2 class="wp-block-heading">1075 Market St. #711</h2>



<figure class="wp-block-image size-full"><img src="https://content.sfstandard.com/wp-content/uploads/2023/06/image_6483441.jpg" alt="" class="wp-image-171226"/><figcaption class="wp-element-caption">A unit at 1075 Market St. | Courtesy Terrence Sims</figcaption></figure>


This studio condo is right on Market Street and offers upper-floor views in a building that used to be the Grauman&#8217;s Imperial Theater. The <a href="https://www.zillow.com/homedetails/1075-Market-St-UNIT-711-San-Francisco-CA-94103/303806745_zpid/" target="_blank" rel="noreferrer noopener">property’s listing</a> also shouts out its shared roof deck and in-unit laundry. Compared with its purchase price in 2019, when the property sold for $640,000, the new listing price is down more than 23%. 

<p>This studio condo is right on Market Street and offers upper-floor views in a building that used to be the Grauman's Imperial Theater. The <a href="https://www.zillow.com/homedetails/1075-Market-St-UNIT-711-San-Francisco-CA-94103/303806745_zpid/" target="_blank" rel="noreferrer noopener">property’s listing</a> also shouts out its shared roof deck and in-unit laundry. Compared with its purchase price in 2019, when the property sold for $640,000, the new listing price is down more than 23%. </p>

<p>This studio condo is right on Market Street and offers upper-floor views in a building that used to be the Grauman&#8217;s Imperial Theater. The <a href="https://www.zillow.com/homedetails/1075-Market-St-UNIT-711-San-Francisco-CA-94103/303806745_zpid/" target="_blank" rel="noreferrer noopener">property’s listing</a> also shouts out its shared roof deck and in-unit laundry. Compared with its purchase price in 2019, when the property sold for $640,000, the new listing price is down more than 23%. </p>

<em>Correction: An earlier version of this story misidentified the property at 1000 N. Point St. #308 as a condo rather than a co-op.</em>

<p><em>Correction: An earlier version of this story misidentified the property at 1000 N. Point St. #308 as a condo rather than a co-op.</em></p>

Sweet deal? 5 San Francisco homes you can buy for under $500K

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>

Take the<a href="https://socketsite.com/archives/2022/07/high-end-condo-finally-trades-for-30-8-below-its-2018-price.html"> $4 million July sale</a> of a unit in 181 Fremont, one of the city’s premier condo towers, as a recent example. The unit sold for some 30% lower than the $5.77 million paid by the seller in 2018, according to real estate blog Socketsite.&nbsp;

<p>Take the<a href="https://socketsite.com/archives/2022/07/high-end-condo-finally-trades-for-30-8-below-its-2018-price.html"> $4 million July sale</a> of a unit in 181 Fremont, one of the city’s premier condo towers, as a recent example. The unit sold for some 30% lower than the $5.77 million paid by the seller in 2018, according to real estate blog Socketsite.&nbsp;</p>

A letter about the sale from real estate brokerage The Krishnan Team said while the discount they were seeking initially “didn’t seem possible,” the offer was eventually accepted at $1.4 million below the list price. 

<p>A letter about the sale from real estate brokerage The Krishnan Team said while the discount they were seeking initially “didn’t seem possible,” the offer was eventually accepted at $1.4 million below the list price. </p>

“The market is the softest it&#8217;s been since 2008. This is especially true for high-rise developments in San Francisco,” the brokerage wrote.&nbsp;

<p>“The market is the softest it's been since 2008. This is especially true for high-rise developments in San Francisco,” the brokerage wrote.&nbsp;</p>

<p>“The market is the softest it&#8217;s been since 2008. This is especially true for high-rise developments in San Francisco,” the brokerage wrote.&nbsp;</p>

The same trends hold true for condos in the lower-tier mid-Market area: <a href="https://www.propertyshark.com/mason/Property/150683229/1075-Market-St-San-Francisco-CA-94103/">A unit at 1075 Market</a> that was purchased for $882,000 in 2018 is currently on the market for $670,000.&nbsp;&nbsp;

<p>The same trends hold true for condos in the lower-tier mid-Market area: <a href="https://www.propertyshark.com/mason/Property/150683229/1075-Market-St-San-Francisco-CA-94103/">A unit at 1075 Market</a> that was purchased for $882,000 in 2018 is currently on the market for $670,000.&nbsp;&nbsp;</p>

“There are some people losing a lot of money on these properties,” said Ilana Minkoff, a broker with Vanguard Properties. “Down there we’re not at 2018 pricing, we’re maybe closer to 2016 or 2017.”

<p>“There are some people losing a lot of money on these properties,” said Ilana Minkoff, a broker with Vanguard Properties. “Down there we’re not at 2018 pricing, we’re maybe closer to 2016 or 2017.”</p>

Condo prices fell 13% year-over-year in August, according to <a href="https://vanguardproperties.com/newsletter/SF_Market_Update_Refresh_Sep_2022.pdf">data from </a>Vanguard Properties. But areas in and around SoMa were outliers. South Beach, Mission Bay and the Bayview were the only three neighborhoods where the average condo sold for lower than its list price in August, with lower prices per square foot compared to other neighborhoods. Conversely, condos in NoPa, Castro and Richmond were selling at more than 115% over list price on average. 

<p>Condo prices fell 13% year-over-year in August, according to <a href="https://vanguardproperties.com/newsletter/SF_Market_Update_Refresh_Sep_2022.pdf">data from </a>Vanguard Properties. But areas in and around SoMa were outliers. South Beach, Mission Bay and the Bayview were the only three neighborhoods where the average condo sold for lower than its list price in August, with lower prices per square foot compared to other neighborhoods. Conversely, condos in NoPa, Castro and Richmond were selling at more than 115% over list price on average. </p>

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Dustin St Jonn, who moved back to the city in 2016 after a spell on the East Coast and recently bought his first home, said he didn’t look at downtown condos at all even though his workplace at the time was located in SoMa. He wound up purchasing a “fixer-upper” condo unit in Twin Peaks—close to the Castro, his main social hub—last April, and spent the last year improving the property.&nbsp;

<p>Dustin St Jonn, who moved back to the city in 2016 after a spell on the East Coast and recently bought his first home, said he didn’t look at downtown condos at all even though his workplace at the time was located in SoMa. He wound up purchasing a “fixer-upper” condo unit in Twin Peaks—close to the Castro, his main social hub—last April, and spent the last year improving the property.&nbsp;</p>

“I think downtowns are going to kind of have to reshape themselves and rethink themselves to make themselves attractive,” St Jonn said. “We&#8217;re no longer that 9-to-5, Monday through Friday environment and I don&#8217;t see us going back to that, even though offices are reopening.”

<p>“I think downtowns are going to kind of have to reshape themselves and rethink themselves to make themselves attractive,” St Jonn said. “We're no longer that 9-to-5, Monday through Friday environment and I don't see us going back to that, even though offices are reopening.”</p>

<p>“I think downtowns are going to kind of have to reshape themselves and rethink themselves to make themselves attractive,” St Jonn said. “We&#8217;re no longer that 9-to-5, Monday through Friday environment and I don&#8217;t see us going back to that, even though offices are reopening.”</p>

Minkoff echoed that sentiment, describing depreciating value for downtown high-rise units, particularly those owned by investors and formerly filled with tenants paying top dollar to be close to their offices or transportation down the Peninsula. 

<p>Minkoff echoed that sentiment, describing depreciating value for downtown high-rise units, particularly those owned by investors and formerly filled with tenants paying top dollar to be close to their offices or transportation down the Peninsula. </p>

At 2238 Market St. for example, a 44-unit condo building that wrapped up construction in May with units <a href="https://sfyimby.com/2022/06/sales-launch-for-2238-market-street-in-duboce-triangle-san-francisco.html">starting at $800,000</a>. Just a few months later, <a href="https://market2238.wpengine.com/floorplans/">the base price</a> has already dropped by $50,000.&nbsp;

<p>At 2238 Market St. for example, a 44-unit condo building that wrapped up construction in May with units <a href="https://sfyimby.com/2022/06/sales-launch-for-2238-market-street-in-duboce-triangle-san-francisco.html">starting at $800,000</a>. Just a few months later, <a href="https://market2238.wpengine.com/floorplans/">the base price</a> has already dropped by $50,000.&nbsp;</p>

But price drops in the area that includes SoMa and South Beach have been especially stark in the ultra luxury segment, defined as condos over $3 million, which saw a nearly 23% year-over-year drop in average price per square foot for the second quarter, according <a href="https://content.sfstandard.com/wp-content/uploads/2022/09/San_Francisco_New_Development_Quarterly_Market_Insights_Report_Q2_2022-2.pdf">to Compass</a>.&nbsp;

<p>But price drops in the area that includes SoMa and South Beach have been especially stark in the ultra luxury segment, defined as condos over $3 million, which saw a nearly 23% year-over-year drop in average price per square foot for the second quarter, according <a href="https://content.sfstandard.com/wp-content/uploads/2022/09/San_Francisco_New_Development_Quarterly_Market_Insights_Report_Q2_2022-2.pdf">to Compass</a>.&nbsp;</p>

“If you’re an investor you’re not going to want to sit and keep a unit empty for three years. You’re going to want to sell,” Minkoff said, noting that the supply glut has made that more difficult. She’s currently working with a client to sell a condo in Mission Bay and recommended they drop the asking price by $100,000.&nbsp;

<p>“If you’re an investor you’re not going to want to sit and keep a unit empty for three years. You’re going to want to sell,” Minkoff said, noting that the supply glut has made that more difficult. She’s currently working with a client to sell a condo in Mission Bay and recommended they drop the asking price by $100,000.&nbsp;</p>

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

San Francisco could see the steepest decline in home prices of any U.S. metro area in the next year, according to a housing price forecast from Zillow.

<p>San Francisco could see the steepest decline in home prices of any U.S. metro area in the next year, according to a housing price forecast from Zillow.</p>

The real estate data company’s <a href="https://www.zillow.com/research/data/" target="_blank" rel="noreferrer noopener">Home Value Forecast</a> projected that overall home prices in the city, which include single family homes, condos and co-ops, are expected to decline by 3.6% by Oct. 31, 2023, compared with the same date this year.  

<p>The real estate data company’s <a href="https://www.zillow.com/research/data/" target="_blank" rel="noreferrer noopener">Home Value Forecast</a> projected that overall home prices in the city, which include single family homes, condos and co-ops, are expected to decline by 3.6% by Oct. 31, 2023, compared with the same date this year.  </p>

That is the sharpest drop of the 100 metros listed in the report, outstripping Honolulu (-2.9%) and third place Baton Rouge (-2.9%). Home prices in San Jose, the other Bay Area city listed in the forecast, are expected to drop by 1.8% over the same period.

<p>That is the sharpest drop of the 100 metros listed in the report, outstripping Honolulu (-2.9%) and third place Baton Rouge (-2.9%). Home prices in San Jose, the other Bay Area city listed in the forecast, are expected to drop by 1.8% over the same period.</p>

In the shorter term, San Francisco fares slightly better. Zillow’s forecast estimates that home prices in the city will drop 1.8% by Jan. 31, 2023, which ranks as third on the list. Austin (-2.7%) and Las Vegas (-2%) are expected to see steeper declines over that period.&nbsp;

<p>In the shorter term, San Francisco fares slightly better. Zillow’s forecast estimates that home prices in the city will drop 1.8% by Jan. 31, 2023, which ranks as third on the list. Austin (-2.7%) and Las Vegas (-2%) are expected to see steeper declines over that period.&nbsp;</p>

The forecasts fall in line with a broader correction in the Bay Area housing market after it reached feverish highs during the pandemic. Since peaking in the spring, market volatility and interest rate hikes have dampened home prices.&nbsp;

<p>The forecasts fall in line with a broader correction in the Bay Area housing market after it reached feverish highs during the pandemic. Since peaking in the spring, market volatility and interest rate hikes have dampened home prices.&nbsp;</p>

But the scale of that impact has varied widely between various Bay Area counties.&nbsp;

<p>But the scale of that impact has varied widely between various Bay Area counties.&nbsp;</p>

San Francisco’s real estate market <a href="https://sfstandard.com/business/san-franciscos-housing-market-is-cooling-faster-than-rest-of-the-region/">has been hit harder than most</a>, a fact partly attributed to demographic shifts during the pandemic, <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">mass layoffs in the tech sector</a> and an empty downtown. According to data from real estate firm Compass, over the last three months, the median home sales price is at $1.6 million, down around 12%.&nbsp;

<p>San Francisco’s real estate market <a href="https://sfstandard.com/business/san-franciscos-housing-market-is-cooling-faster-than-rest-of-the-region/">has been hit harder than most</a>, a fact partly attributed to demographic shifts during the pandemic, <a href="https://sfstandard.com/business/tech-scaled-too-quickly-and-now-the-bay-area-is-paying-the-price/">mass layoffs in the tech sector</a> and an empty downtown. According to data from real estate firm Compass, over the last three months, the median home sales price is at $1.6 million, down around 12%.&nbsp;</p>

Downtown condos, a once-popular option for <a href="https://sfstandard.com/arts-culture/buying-san-francisco-which-starter-condo-near-downtown-would-you-pick-for-500k/">entry-level home buyers</a>, have <a href="https://sfstandard.com/housing-development/san-francisco-condo-real-estate-prices-continue-to-drop/">seen major price drops</a> as remote work became the norm, reducing the <a href="https://sfstandard.com/business/empty-offices-are-dragging-down-san-francisco-home-prices/">need to be close to Downtown</a>.

<p>Downtown condos, a once-popular option for <a href="https://sfstandard.com/arts-culture/buying-san-francisco-which-starter-condo-near-downtown-would-you-pick-for-500k/">entry-level home buyers</a>, have <a href="https://sfstandard.com/housing-development/san-francisco-condo-real-estate-prices-continue-to-drop/">seen major price drops</a> as remote work became the norm, reducing the <a href="https://sfstandard.com/business/empty-offices-are-dragging-down-san-francisco-home-prices/">need to be close to Downtown</a>.</p>

On the other end of the spectrum, luxury home sales have <a href="https://www.sfchronicle.com/realestate/article/bay-area-luxury-housing-17531609.php">slowed both locally and nationally</a> as stock market volatility and larger economic uncertainty put a damper on big-ticket purchases. Sales in November for homes over $5 million were down by more than 50%, according to Compass.&nbsp;

<p>On the other end of the spectrum, luxury home sales have <a href="https://www.sfchronicle.com/realestate/article/bay-area-luxury-housing-17531609.php">slowed both locally and nationally</a> as stock market volatility and larger economic uncertainty put a damper on big-ticket purchases. Sales in November for homes over $5 million were down by more than 50%, according to Compass.&nbsp;</p>

Case in point: A home in Pacific Heights <a href="https://www.mansionglobal.com/articles/a-beaux-arts-duplex-at-historic-san-francisco-co-op-sells-for-19-million-01669926220" target="_blank" rel="noreferrer noopener">recently sold for $19 million</a>, the highest price paid for an apartment in San Francisco this year. However, the property was initially listed at $30 million in January. 

<p>Case in point: A home in Pacific Heights <a href="https://www.mansionglobal.com/articles/a-beaux-arts-duplex-at-historic-san-francisco-co-op-sells-for-19-million-01669926220" target="_blank" rel="noreferrer noopener">recently sold for $19 million</a>, the highest price paid for an apartment in San Francisco this year. However, the property was initially listed at $30 million in January. </p>

Fears of a potential recession—which many economic observers expect in 2023—is also throwing a wrench in the market. Experts say the tech-centric Bay Area might be more sensitive to an expected downturn as well.&nbsp;

<p>Fears of a potential recession—which many economic observers expect in 2023—is also throwing a wrench in the market. Experts say the tech-centric Bay Area might be more sensitive to an expected downturn as well.&nbsp;</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. 

<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. </p>

“Now with the weak tech sector, the water going into that hose is weaker, too,” she said. 

<p>“Now with the weak tech sector, the water going into that hose is weaker, too,” she said. </p>

San Francisco home prices could fall further than any U.S. metro in 2023

San Francisco’s super-rich have pumped the brakes on buying ultra-luxury estates, many of which are dropping sharply in price to entice buyers.&nbsp;

<p>San Francisco’s super-rich have pumped the brakes on buying ultra-luxury estates, many of which are dropping sharply in price to entice buyers.&nbsp;</p>

After an overheated pandemic peak, home sales and sales prices across all segments have dipped—but the city’s most expensive homes have taken <a href="https://sfstandard.com/2023/01/06/luxury-home-sales-across-the-bay-area-are-declining-fast/">an even steeper dive</a>.&nbsp;

Luxury home sales across the Bay Area are declining—fast

<p>After an overheated pandemic peak, home sales and sales prices across all segments have dipped—but the city’s most expensive homes have taken <a href="https://sfstandard.com/2023/01/06/luxury-home-sales-across-the-bay-area-are-declining-fast/">an even steeper dive</a>.&nbsp;</p>

“The market has clearly changed, and price points are being pushed down,” said Payton Stiewe with Artemis Real Estate. “That ultra high-end market is definitely on the quiet side, and prices in the $10 million-plus segment are taking a haircut.”

<p>“The market has clearly changed, and price points are being pushed down,” said Payton Stiewe with Artemis Real Estate. “That ultra high-end market is definitely on the quiet side, and prices in the $10 million-plus segment are taking a haircut.”</p>

Houses on Walnut Street are pictured, in San Francisco on Friday, August 25, 2023. The luxury and ultra luxury housing market has recently seen pricing cuts and a major drop in transaction volume.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/INLINE03_MansionsPricingDown082123_16.jpg?w=2500" alt="" class="wp-image-195285"/><figcaption class="wp-element-caption">Houses on Walnut Street are pictured in San Francisco on Friday. The luxury and ultra-luxury housing market has recently experienced pricing cuts and a major drop in transaction volume.</figcaption></figure>


A property at 3410 Jackson St. in Presidio Heights was put on the market in February at $23.5 million before eventually selling at $18.5 million in May.

<p>A property at 3410 Jackson St. in Presidio Heights was put on the market in February at $23.5 million before eventually selling at $18.5 million in May.</p>

Less than a mile away in Cow Hollow, a property at 2660 Scott St. that was listed for sale in January at $16.5 million sold in July at $13 million.

<p>Less than a mile away in Cow Hollow, a property at 2660 Scott St. that was listed for sale in January at $16.5 million sold in July at $13 million.</p>

In Sea Cliff, a property at 9 25th Ave. that first went on the market last September at a $32 million asking price, saw a series of price drops before selling in April for $20 million.&nbsp;

<p>In Sea Cliff, a property at 9 25th Ave. that first went on the market last September at a $32 million asking price, saw a series of price drops before selling in April for $20 million.&nbsp;</p>

Hanne Vastveit, a broker with San Francisco firm Avenue 8, pointed to the rise in interest rates and stock market uncertainty as factors in the drop-off in luxury home sales and downward pressure on prices.

<p>Hanne Vastveit, a broker with San Francisco firm Avenue 8, pointed to the rise in interest rates and stock market uncertainty as factors in the drop-off in luxury home sales and downward pressure on prices.</p>

In July, the median price per square foot for homes over $5 million in San Francisco was $1,468, a more than 20% decline from the number one year prior, based off three-month rolling data.

<p>In July, the median price per square foot for homes over $5 million in San Francisco was $1,468, a more than 20% decline from the number one year prior, based off three-month rolling data.</p>

Sales for homes over $5 million in San Francisco are down 56% year to date in 2023 compared with a year prior. In the ultra-high-end segment of $10 million+ homes, sales are down 45% over the same period, according to data from the Multiple Listings Network, a database compiled by residential brokers.&nbsp;

<p>Sales for homes over $5 million in San Francisco are down 56% year to date in 2023 compared with a year prior. In the ultra-high-end segment of $10 million+ homes, sales are down 45% over the same period, according to data from the Multiple Listings Network, a database compiled by residential brokers.&nbsp;</p>

The sales price to list price ratio of luxury homes this year—a measure of how sales prices compare to where homes are listed—sits at 96%, compared with 104% in 2022. That 8% difference could mean $800,000 for a $10 million home.&nbsp;

<p>The sales price to list price ratio of luxury homes this year—a measure of how sales prices compare to where homes are listed—sits at 96%, compared with 104% in 2022. That 8% difference could mean $800,000 for a $10 million home.&nbsp;</p>


<h2 class="wp-block-heading" id="h-a-consumer-confidence-problem">A ‘Consumer Confidence’ Problem</h2>


Brokers like Stiewe attributed some of the drop-off in San Francisco to larger concerns among residents about urban problems like homelessness and public safety.

<p>Brokers like Stiewe attributed some of the drop-off in San Francisco to larger concerns among residents about urban problems like homelessness and public safety.</p>

“We have plenty of clients that have moved out of Pacific Heights and the Marina Boulevard area because of the feeling that they’ve just had enough,” Stiewe said. “The more established families are those that are a bit more sensitive to the changes in the city, but the younger, newer buyers coming in are not at the point financially to really buy these big mansions.”

<p>“We have plenty of clients that have moved out of Pacific Heights and the Marina Boulevard area because of the feeling that they’ve just had enough,” Stiewe said. “The more established families are those that are a bit more sensitive to the changes in the city, but the younger, newer buyers coming in are not at the point financially to really buy these big mansions.”</p>

Stiewie, who works in both Marin County and San Francisco, said North Bay luxury properties have had a tendency to hold their value more consistently even through some of the market doldrums.&nbsp;

<p>Stiewie, who works in both Marin County and San Francisco, said North Bay luxury properties have had a tendency to hold their value more consistently even through some of the market doldrums.&nbsp;</p>

3410 Jackson Street is pictured, in San Francisco on Friday, August 25, 2023. The luxury and ultra luxury housing market has recently seen pricing cuts and a major drop in transaction volume.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/INLINE01_MansionsPricingDown082123_13.jpg?w=2500" alt="" class="wp-image-195283"/><figcaption class="wp-element-caption">The home at 3410 Jackson St. was put on the market in February at $23.5 million before selling at $18.5 million in May.&nbsp;</figcaption></figure>


In the first seven months of the year, home sales over $5 million in San Francisco have failed to reach levels seen in 2019 or 2018. On the other hand, luxury home sales in Marin, Santa Clara and San Mateo counties have exceeded pre-pandemic numbers during the same period.

<p>In the first seven months of the year, home sales over $5 million in San Francisco have failed to reach levels seen in 2019 or 2018. On the other hand, luxury home sales in Marin, Santa Clara and San Mateo counties have exceeded pre-pandemic numbers during the same period.</p>

“People who’ve been through many cycles in the city know it&#8217;s a boom-bust town,” said Arrian Binnings, a co-founder of Artemis Real Estate. “When it’s booming, it’s amazing. And when it busts? Well, it’s got an ugly side, too.”

<p>“People who’ve been through many cycles in the city know it's a boom-bust town,” said Arrian Binnings, a co-founder of Artemis Real Estate. “When it’s booming, it’s amazing. And when it busts? Well, it’s got an ugly side, too.”</p>

<p>“People who’ve been through many cycles in the city know it&#8217;s a boom-bust town,” said Arrian Binnings, a co-founder of Artemis Real Estate. “When it’s booming, it’s amazing. And when it busts? Well, it’s got an ugly side, too.”</p>

Binnings said the higher up the property ladder, the more susceptible homes are to wild swings in value because of the relatively few buyers at that price point. But he made sure to note that some of the data and perception around the current downturn is skewed by the frenzied nature of the housing market during 2021 and the beginning of 2022.

<p>Binnings said the higher up the property ladder, the more susceptible homes are to wild swings in value because of the relatively few buyers at that price point. But he made sure to note that some of the data and perception around the current downturn is skewed by the frenzied nature of the housing market during 2021 and the beginning of 2022.</p>

“It’s like when you give a kid a toy and you take it back,” Binnings said. “The psychology from a lot of people is ‘Well, we’re going to get our toy back.’”

<p>“It’s like when you give a kid a toy and you take it back,” Binnings said. “The psychology from a lot of people is ‘Well, we’re going to get our toy back.’”</p>

Danielle Lazier, a broker with Vivre Real Estate, said San Francisco’s negative perception issue has cut the number of interested buyers currently in the high-end market.&nbsp;

<p>Danielle Lazier, a broker with Vivre Real Estate, said San Francisco’s negative perception issue has cut the number of interested buyers currently in the high-end market.&nbsp;</p>

“It still comes back to consumer confidence. Are you someone who’s familiar with the city and feels we’re more or less at the bottom? Then it might not be a bad time to buy a premium property,” Lazier said. “But if you’re more pessimistic, you’re thinking, &#8216;I’d rather keep my liquidity.&#8217;”

<p>“It still comes back to consumer confidence. Are you someone who’s familiar with the city and feels we’re more or less at the bottom? Then it might not be a bad time to buy a premium property,” Lazier said. “But if you’re more pessimistic, you’re thinking, 'I’d rather keep my liquidity.'”</p>

<p>“It still comes back to consumer confidence. Are you someone who’s familiar with the city and feels we’re more or less at the bottom? Then it might not be a bad time to buy a premium property,” Lazier said. “But if you’re more pessimistic, you’re thinking, &#8216;I’d rather keep my liquidity.&#8217;”</p>

Lazier said she’s found high-net-worth families moving to San Francisco, drawn by the city’s strong labor market and tech industry, have taken to renting expensive properties instead of buying.

<p>Lazier said she’s found high-net-worth families moving to San Francisco, drawn by the city’s strong labor market and tech industry, have taken to renting expensive properties instead of buying.</p>

“Very expensive rentals are in high demand right now, in the realm of $30,000 or $35,000 a month,” Lazier said.

<p>“Very expensive rentals are in high demand right now, in the realm of $30,000 or $35,000 a month,” Lazier said.</p>


<h2 class="wp-block-heading" id="h-interest-rate-woes-nbsp">Interest Rate Woes&nbsp;</h2>


Although affluent purchasers at this price point tend to deal mostly in cash, brokers say macroeconomic issues have also played a role in price drops.

<p>Although affluent purchasers at this price point tend to deal mostly in cash, brokers say macroeconomic issues have also played a role in price drops.</p>

First Republic Bank, which was <a href="https://sfstandard.com/2023/05/01/regulators-seize-first-republic-and-sell-assets-to-jpmorgan-chase/">shut down by regulators and sold off</a> to JPMorgan Chase in May after a bank run, <a href="https://sfstandard.com/2023/05/02/first-republic-takeover-deals-yet-another-blow-to-bay-area-real-estate/">made so-called jumbo mortgages</a> a centerpiece of its business model. The company was well-known for offering lower-than-market rate mortgages as a sweetener to attract clients.

Regulators seize First Republic and sell assets to JPMorgan Chase

First Republic Bank takeover another blow to Bay Area real estate industry

<p>First Republic Bank, which was <a href="https://sfstandard.com/2023/05/01/regulators-seize-first-republic-and-sell-assets-to-jpmorgan-chase/">shut down by regulators and sold off</a> to JPMorgan Chase in May after a bank run, <a href="https://sfstandard.com/2023/05/02/first-republic-takeover-deals-yet-another-blow-to-bay-area-real-estate/">made so-called jumbo mortgages</a> a centerpiece of its business model. The company was well-known for offering lower-than-market rate mortgages as a sweetener to attract clients.</p>

“First Republic was our No. 1 go-to bank for high-end real estate financing, and nobody has filled that gap,” Stiewe said. Although brokers say they’ve heard of piecemeal deals, and institutions like Redwood Credit Union are seeking to expand lending portfolios, no company has really embraced jumbo mortgages.

<p>“First Republic was our No. 1 go-to bank for high-end real estate financing, and nobody has filled that gap,” Stiewe said. Although brokers say they’ve heard of piecemeal deals, and institutions like Redwood Credit Union are seeking to expand lending portfolios, no company has really embraced jumbo mortgages.</p>

<a href="https://sfstandard.com/2023/05/11/san-francisco-home-listings-way-down-as-mortgage-lock-in-scares-off-sellers/">Mortgage lock-in</a>, a phenomenon where existing homeowners have avoided purchasing new properties because of higher interest rates, has also slowed transactions.&nbsp;

San Francisco home listings down 40% as &#8216;mortgage lock-in&#8217; scares off sellers

<p><a href="https://sfstandard.com/2023/05/11/san-francisco-home-listings-way-down-as-mortgage-lock-in-scares-off-sellers/">Mortgage lock-in</a>, a phenomenon where existing homeowners have avoided purchasing new properties because of higher interest rates, has also slowed transactions.&nbsp;</p>

The gate in front of 2660 Scott Street is pictured, in San Francisco on Friday, August 25, 2023. The luxury and ultra luxury housing market has recently seen pricing cuts and a major drop in transaction volume.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/INLINE02_MansionsPricingDown082123_07.jpg?w=2500" alt="" class="wp-image-195284"/><figcaption class="wp-element-caption">The home at 2660 Scott St. was listed for sale in January at $16.5 million and sold in July for $13 million.</figcaption></figure>


Instead, Stiewe said many homeowners in neighborhoods like Pacific Heights have taken the opportunity to undergo renovations and upgrades.

<p>Instead, Stiewe said many homeowners in neighborhoods like Pacific Heights have taken the opportunity to undergo renovations and upgrades.</p>

Oftentimes, expensive properties are floated off-market for months to get a sense of buyer interest prior to a public listing. They can also come with protracted negotiations, said Alexander Fromm Lurie, a luxury real estate advisor with the Lurie Group at Compass.

<p>Oftentimes, expensive properties are floated off-market for months to get a sense of buyer interest prior to a public listing. They can also come with protracted negotiations, said Alexander Fromm Lurie, a luxury real estate advisor with the Lurie Group at Compass.</p>

Although the bulk of ultra-luxury properties are located in Northern neighborhoods like Pacific Heights, Presidio Heights and the so-called Gold Coast, Lurie said Downtown’s challenges have <a href="https://sfstandard.com/search/?query=luxury%20homes">impacted the high-end condo market</a> in neighborhoods like SoMa and South Beach.&nbsp;

<p>Although the bulk of ultra-luxury properties are located in Northern neighborhoods like Pacific Heights, Presidio Heights and the so-called Gold Coast, Lurie said Downtown’s challenges have <a href="https://sfstandard.com/search/?query=luxury%20homes">impacted the high-end condo market</a> in neighborhoods like SoMa and South Beach.&nbsp;</p>

“There are just fewer buyers there; there are fewer people who want to be living there and specifically spending tens of millions of dollars to do so,” Lurie said.&nbsp;

<p>“There are just fewer buyers there; there are fewer people who want to be living there and specifically spending tens of millions of dollars to do so,” Lurie said.&nbsp;</p>

The downturn in the Downtown condo market, however, has created some opportunities for some of Lurie’s ultra-wealthy clients. He said a handful have purchased lower-priced condos as investment properties with the idea of flipping them for a profit when interest rates fall and market conditions improve.

<p>The downturn in the Downtown condo market, however, has created some opportunities for some of Lurie’s ultra-wealthy clients. He said a handful have purchased lower-priced condos as investment properties with the idea of flipping them for a profit when interest rates fall and market conditions improve.</p>

Brokers report buyers are choosier than in the market’s pandemic peak, and the slower market means more leverage for buyers who are generally seeking turnkey or ready-to-move-in properties.

<p>Brokers report buyers are choosier than in the market’s pandemic peak, and the slower market means more leverage for buyers who are generally seeking turnkey or ready-to-move-in properties.</p>

“Oftentimes, that’s still not enough,&#8221; Binnings said. &#8220;It has to be well presented, it has to be competitively priced and it has to be in a desirable area. It’s very house-dependent.&#8221;

<p>“Oftentimes, that’s still not enough," Binnings said. "It has to be well presented, it has to be competitively priced and it has to be in a desirable area. It’s very house-dependent."</p>

<p>“Oftentimes, that’s still not enough,&#8221; Binnings said. &#8220;It has to be well presented, it has to be competitively priced and it has to be in a desirable area. It’s very house-dependent.&#8221;</p>

Buyers have more leverage to ask for contingencies on an offer.

<p>Buyers have more leverage to ask for contingencies on an offer.</p>

“Contingencies leave the door open for renegotiation,” Binnings said. “So we&#8217;re in a market right now where sellers should not necessarily be counting on their agreed-upon contract price to actually stick until contingencies have been removed.”

<p>“Contingencies leave the door open for renegotiation,” Binnings said. “So we're in a market right now where sellers should not necessarily be counting on their agreed-upon contract price to actually stick until contingencies have been removed.”</p>

<p>“Contingencies leave the door open for renegotiation,” Binnings said. “So we&#8217;re in a market right now where sellers should not necessarily be counting on their agreed-upon contract price to actually stick until contingencies have been removed.”</p>

A Porsche sits parked on Jackson Street, in San Francisco on Friday, August 25, 2023. The luxury and ultra luxury housing market has recently seen pricing cuts and a major drop in transaction volume.


<figure class="wp-block-image size-large"><img src="https://content.sfstandard.com/wp-content/uploads/2023/08/INLINE04_MansionsPricingDown082123_19.jpg?w=2500" alt="" class="wp-image-195286"/><figcaption class="wp-element-caption">A Porsche sits parked on Jackson Street in San Francisco on Friday.</figcaption></figure>


The summer months are typically a slow time for luxury home sales, but brokers said they aren’t holding their breath for a dramatic fall recovery.

<p>The summer months are typically a slow time for luxury home sales, but brokers said they aren’t holding their breath for a dramatic fall recovery.</p>

Most brokers say they expect to see more of the same until there’s a broader recovery of the city, along with an indication that the era of rate-tightening is coming to an end.

<p>Most brokers say they expect to see more of the same until there’s a broader recovery of the city, along with an indication that the era of rate-tightening is coming to an end.</p>

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