Luxury home sales pushed the median sales price in San Francisco and surrounding areas to a near-record high in October, despite an overall cooling in the luxury real estate market there, according to the Autumn Market Report published by Paragon Real Estate Group on Monday.
The median sales price for a home in the Bay Area hit $1.275 million in October, just shy of the peak of $1.28 million in April. Luxury sales, which tend to spike between the second week in September and Halloween after the summer vacations and before the winter holiday season, drove the price boost, which was 6% higher than the median sales price in October of last year.
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A less-than-white-hot market for luxury apartments
But overall, luxury market conditions continued to cool, particularly in the condo, co-op and tenants-in-common (TIC) sector, which saw more price reductions and sales volume dip, a situation exacerbated by new condo developments coming to market, Paragon said.
Since January, sales of luxury condos, co-ops and TICs, which Paragon defines as $2 million or more, fell 17% compared to the same period last year. Between January and the end of October, there were 191 luxury condo sales, with 17 units selling for $10 million or more.
And while this October saw slightly more condo sales than October 2015, sales have dropped off considerably since the strong spring selling seasons in recent years. October saw roughly 40% less sales volume than the spring of 2015, for example.
Paragon bases the report on sales reported to the Multiple Listing Service, and therefore does not include new development sales in its analysis. But the growing role of new developments in San Francisco’s condo market has tightened competition in the resale condo market, and is responsible, in part, for cooling luxury condo resales, according to the report.
The portion of luxury condos, co-ops and TICs selling for a premium continues to decline. Only 50% of the units sold in October went for more than their asking price, compared with 56% last year and 59% in October 2014.
Bay Area condos also suffer from an oversupply. Paragon measures supply in terms of the time it would take to sell the current inventory. In October, the month's supply of condos reached six-and-a-half months’ (excluding new projects), up from four-and-a- half months a year ago, according to the report.
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A bright spot: Luxury house sales
By contrast, luxury house sales, defined as $3 million or more, have done better in San Francisco.
"Pursuant to a big jump in new high-end home listings in September, luxury house sales in October suddenly hit their highest point in many years, if not ever," reads the report.
Between January and the end of October, sales of houses increased 5% from the same period last year.
There have been 174 luxury house sales so far this year, including 10 properties that went for $10 million or more, all clustered in a region encompassing Pacific and Presidio Heights, Cow Hollow and Marina.
And in October, 56% of homes sold for more than the listing price, up from 50% a year ago.
The cooling in San Francisco is not unique, as high-end housing hubs like New York and Miami have also seen slowing in sales activity.
But it shows little evidence of an impending housing crash even in the face of local and macro events hurting the market there, Paragon said.
"The past 14 months has seen the Chinese stock market crash, the oil price crash, Brexit, high U.S. financial market volatility, a slowdown in the Bay Area high-tech boom, and enormous election-related anxiety," Paragon’s analysts wrote in the report. "However, despite significant affordability issues and the transition to less heated market conditions—as illustrated in the analyses of this report—so far, we have seen no sign of anything approaching an impending crash in our local market."