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September 11, 2019

Bay Area Luxury Home Sales Santa Clara remains by far the largest market for luxury home sales in the Bay Area, though San Mateo leads in the market for homes selling for $5 million and above.

San Francisco is likely to see a frenetic September for new home listings and October for home sales, say analysts at two of the city’s largest real estate companies.

Newly released market reports from Sotheby’s International and Compass Real Estate indicate that San Francisco is out-performing the rest of the Bay Area as most of the other counties have seen 3 to 5 percent declines in median home prices since peaking in spring 2018, while the city saw a new monthly peak in June and a new quarterly peak in the second quarter.

September is typically the single month with the highest number of new listings, and luxury house sales often peak for the year in October, and a recent market trends report by Sotheby’s International suggests that San Francisco’s market is even more robust than numbers indicate as MLS figures typically leave out some of the city’s most significant deals, around 30 percent of which trade off-market.

“The market is still pretty strong in the city — it seems to be defying all odds,” said Jeff Gibson, senior vice president of Sotheby’s International Realty in San Francisco. “I think we will have more inventory than we’ve had in a while this fall — we will know in the next two weeks. That’s a shifting sign because we’ve been super tight on listings before.”

Gibson said new homes typically come online after Labor Day and that agents will often stagger multiple listings in order to get them all up by the end of September. He said there have been more deals for $10 million luxury homes this year and that many of those haven’t shown up in MLS. In 2018, for example, 15 of 46 sales above $7 million were done privately, according to the data from Sotheby’s International.

“What it’s saying to me is that people are feeling bullish in S.F. — here are people still spending on high end properties,” Gibson said. He added that the $3 to $7 million range is the more “challenged” segment of the market. “That’s not quite as robust as we’d like to see it.”

“October for years has been the biggest month for luxury home sales in S.F.,” said Patrick Carlisle, chief marketing analyst with Compass Real Estate, which just published a September report on the S.F. market. “I presume this is going to be another strong autumn for luxury home sales.”

Factors that could affect the city’s real estate market this fall are the stock market and historically low interest rates, according to Patrick Carlisle, chief marketing analyst with Compass Real Estate, which also just published a September report on the San Francisco market.

“If stock markets stay high and interest rates stay low and the IPO effect is still playing out, I suspect we will have a stronger autumn market this year than last year,” Carlisle told the Business Times.

Carlisle said the IPO effect in the city has “shielded” S.F. from the 3 to 5 percent median home price declines experienced by Bay Area counties from Santa Clara and to Sonoma. “S.F. has really been the standout housing market in the Bay Area — I can only assume this is due to the roll out of all the IPOs,” Carlisle said. “Oakland is impacted because that is the affordable place to live if you’re moving from San Francisco.”

Another variable affecting the S.F. market is foreign migration, Carlisle said, which has been trending down. He said recent data from the National Association of Realtors estimates that foreign home buying has dropped by 50 percent nationally.

“Housing markets are all about supply and demand. Even though our growth rates have slowed over the past couple of years, they have still stayed positive because of foreign migration,” Carlisle said. “If you increase the number of sellers and decrease the number of buyers, it could throw prices down.”

Overall, Carlisle told the Business Times that ” the two months will be critical as to our understanding to where the market is trending.”

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