The high-end home market in the San Francisco Bay Area could be starting to feel the effects of economic uncertainty around the globe. Some buyers from China, long a key source for luxury homes sales in the Bay Area, have hit pause on purchase decisions in the U.S., said Roh Habibi, host of Bravo’s “Million Dollar Listing San Francisco” and a real-estate agent for Coldwell Broker Previews International. “They are being a little bit more conservative,” Habibi said. Russian buyers also have pulled back, he said. “We do have international activity from Canada and Brazil.” Jonathan Smoke, chief economist for realtor.com, said an analysis of existing-home sales and survey data from the National Association of Realtors shows that purchases by foreign buyers were down 16% this year through August compared with the same period last year. The data don't break out foreign-buyer purchases for specific metros. “The relative strength of the U.S. economy has resulted in a stronger dollar, and that has turned the trend of recent years to favor U.S. consumers over foreign buyers,” Smoke said. (News Corp, owner of Mansion Global, also owns Move Inc., which operates realtor.com.) Smoke said international traffic on realtor.com has dipped slightly this year. San Francisco is the seventh most-searched U.S. city on the site by international consumers, but realtor.com isn’t able to rank site usage by Chinese consumers because of the Chinese government’s firewall that blocks positive identification by country of origin.
To be sure, despite a pause in international traffic, San Francisco’s housing market remains robust, according to the latest S&P/Case-Shiller Home Price indices released Tuesday. San Francisco reported the highest year-over-year house price gain—10.4%—of the 20 cities with price gains. San Francisco and Denver were the only two cities recording double-digit gains. San Francisco has always been an expensive market, but price increases are beginning to push some people out of the housing market, said Dean Wehrli, senior vice president of John Burns Real Estate Consulting. “Buyers are being stretched to their natural limits, and you are starting to get some price sensitivity even by upscale, move-up buyers in some areas,” Wehrli said. That’s happening mainly in outlying markets, not within the city of San Francisco, where demand remains robust, he said. For the affluent buyer with money to spend, there isn’t as much to choose from: the inventory of luxury and ultraluxury homes in the Bay area remains tight, Habibi said. (For the San Francisco area, he said luxury is generally considered to be properties priced over $5 million, and ultraluxury is priced over $10 million.) When ultraluxury properties do hit the market the Bay Area, it isn’t unusual for them to sit for a year or more, Habibi said. “Our ultraluxury market is definitely way softer than places like Los Angeles and New York City,” he said. Real-estate data analytics firm CoreLogic said the August year-over-year gain in home sales for the Bay Area was the smallest since March of this year. CoreLogic said 8,062 homes and condos sold in August, down 11.7% from July but up 4.5% from a year earlier. The report covers the counties of Alameda, Contra Costa, Marin, Napa, Santa Clara, San Francisco, San Mateo, Solano and Sonoma. “The whole summer was comparatively slow compared to the winter and spring, which was very, very good,” Wehrli said. “Things have slowed down in terms of velocity and pace.”