The San Francisco real estate market experienced a shift towards normalization in Q1, moving away from what we typically see in SF; multiple offers, properties selling way over asking price. This has resulted in homes sitting on the market for longer, and some not selling at all.

Properties that are well-presented and priced correctly are still in high demand and will move quickly, but anything less-than turnkey and priced according to the old 3% rate market rather than the current rate environment will sit on the market significantly longer. There is an affordability issue in this higher rate market, especially for lower-median priced homes, as buyers in these price points are heavily rate conscious. Pricing strategy is more important than ever.

Condo Market

Condo sales in Pacific Heights rebounded well in Q1 of 2023; Demand remains high.

The average price for a condo increased in Q1 to the north of $1.85M, compared to an average of $1.79M in 2022.

While the price per foot and days on market fluctuated slightly, 25 sales above last year's average show there is still a market for desirable condominiums in Pac Heights.

We've seen affordability be massively affected in recent months, and buyers in the condominium market are typically most affected by increased rates. The Pacific Heights condo market maintaining value is a good sign.

‍Median Market

The median housing market in Pacific Heights saw only 1 property sale in Q1 of '23.

The average price for a single-family home raced all the way to ~ $9M in '21/'22. I remember when I started tracking Pacific Heights at a ~$4.5M avg. in the Summer of 2018 and thought this neighborhood was undervalued. Fast-forward a few years and we've seen values double, then half.

The single sale closed for $4,200,000M after 31 days on market, highlighting a significant pullback in market activity. However, there are still plenty of buyers in the market for turnkey Pacific Heights homes.

Luxury Market

Similar to most luxury markets around the state, only 1 luxury property traded hands in Pacific Heights for $5,950,000, barely meeting the criteria we use to qualify above a median home.

The luxury property market is the first to be affected when the market shifts, as many buyers are financially savvy and consider primary residences as a liability on their balance sheet, and leverage banks to keep as much capital at play as possible. When securing a luxury real estate asset has a dramatically increased monthly carrying cost.

The general theme of macro-economic activity is more-of-the-same. We're seeing a steady diet of stress events like Silicon Valley Bank's collapse and the sell off of others, First Republic flailed for a moment which caused the entire real estate market to hold it's breath (FR is San Francisco's leading residential mortgage lender), and tech companies are laying off employees and axing non-revenue generating business activity, all typical during periods of tightening. Also, the fed raises rates again at the turn of Q2 by 25bp and plans of doing this a few more times.

However, and this is a BIG however, California is a sunshine state. People don't go to open houses in the rain (we're ridiculous, yes). With the sun back out, I wouldn't be surprised if we saw a flurry of activity.

Learn more about Pacific Heights

If you have any questions, text me.

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