Bay Area ultra wealthy on the hunt for bigger, better second homes

Stock market gains, work from home has likely fueled “the largest boom in second home sales in history”

San Francisco /
Dec.December 06, 2021 11:11 AM
One Steuart Lane (One Steuart Lane)

A Sonoma two-bedroom on five oceanside acres sold for $12 million, $4 million over the asking price. A $40 million home in Pebble Beach is in contract. In Lake Tahoe, two homes sold this year for $31 million and another is in contract for $60 million.

Even in the Bay Area, where you’ll need to earn $300,000 a year just to afford a median-priced house, second-home prices within driving distance of major cities are raising eyebrows. Enriched by a buoyant stock market and no longer shackled to a work commute, the sticker shock isn’t a problem for the region’s wealthiest residents.

“The pandemic has probably fueled the largest boom in second-home sales in history, at least in a relatively short period of time,” said Compass Chief Market Analyst Patrick Carlisle. “Second homes are probably being used far more than they were in the past.”

Northern California is hardly alone. Nationwide, demand for second homes surged 70 percent by October compared to those pre-pandemic days of early 2020. Yet the state stands out because of its high-visibility — and often ineffectual — attempts to address affordability and homelessness. California recently failed its affordability report card and San Francisco has been called out by the state for not approving several high-profile housing developments.

As San Francisco’s homeless — or as more typically termed locally, “unhoused” — increasingly set their tents afire and sometimes employ upside-down shopping carts as makeshift barbecues, sale prices in second-home communities around the bay are spiking.

Median home prices in Coastal Sonoma and Sea Ranch, both popular with second-home buyers, jumped 50 percent in a year, to $1.5 million, Compass data show. Compare that with the county as a whole, where they rose by $50,000, or about 7 percent, to $750,000.

“Many that could afford to leave their urban living environments and purchase a second home with room for all in the family to work and play did so over the last 20 months,” said Compass agent Patrick Barber.

At the same time, a ripple effect is stimulating what had been a stagnant San Francisco condominium market. Some wealthy empty-nester suburbanites are seeking second homes closer to the amenities of a big city, like on-demand food delivery, and are willing to downsize to about 2,000 square feet without relinquishing ample room for entertaining and private outdoor amenities such as balconies and terraces.

While people often think of Sonoma or Hawaii as likely second-home locations for these “C-Suite” buyers, the new city slickers are looking for something more lively, not another retreat, said Paul Zeger, president of Polaris Pacific, which handles sales at several new condo developments in the city.

“They want to use their season tickets to the Warriors or go to the opera,” Zeger said. Polaris said recently that a penthouse condo at the “ultra luxury” One Steuart Lane, on the waterfront, recently sold for the highest price per square foot since 2018.

About half the residents of One Steuart are second-home buyers, many of whom are seeking to be closer to their children or grandchildren, according to Zeger. A block away, though not on the water, about a fifth of buyers at MIRA SF, which he described as “upscale to luxury,” were seeking another home on top of large estates in the suburbs, he said.

The company also handles sales for “entry-level” Serif condos in Union Square. Those units, almost all under 1,000 square feet, are attracting both first- and second-home buyers who need a place for shorter stays while they do business in the city, Zeger said.

Carlisle, the Compass analyst, said “normal people,” if not the ultrawealthy, are still likely to keep buying smaller second homes in the city and in places like Napa and Tahoe. It’s too soon to say whether people will decide to permanently pick one home and sell the other.

“Society is still trying to figure out the pandemic’s long-term effect on life,” he said. “The pandemic continues to surprise us.”





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