One of the most dramatic indicator that the party’s over for San Francisco’s luxury residential can be found at 70 South Park. The 5,400-square-foot in SoMa just slashed $4 million off its initial $12 million listing price after just a month on the market.
Listing agent Steve Wu of Compass declined to comment on why the price was cut so swiftly and substantially, but in a previous interview he said the initial ask on the architecturally distinct home was “subjective.”
“How do you price a Monet?” Wu asked.
Even at a one-third discount, the home could still be the biggest residential sale in the neighborhood. Over the last five years, the most expensive sale fetched $4.5 million, according to Redfin.
And 70 South Park isn’t alone. A combination of rising interest rates, inflation and a volatile stock market have pushed sellers to reduce asking prices across the luxury market.
In Seacliff, a 6,100-square-foot Mediterranean-style seven-bedroom home at 625 El Camino Del Mar came to market in February with an initial asking price of $8.8 million before dropping to just below $8 million in March. Another price cut came in May, and then again in July–the property is now listed at $7.2 million.
Across town in Glen Park, a 6,200-square-foot home owned by venture capitalist Keith Rabois has reduced its original $12 million listing price twice since coming onto the market in late 2020. It was reduced to $11 million in April, and is now at $10.3 million.
The number of residential price reductions on active listings across San Francisco more than doubled in June 2022 compared with one year prior, according to Compass data. The company doesn’t track price cuts specifically for luxury homes, which it defines as those priced over $3 million, but luxury sales volume in San Francisco was down nearly 31 percent in this June compared with one year ago, nearly in tandem with the city overall.
Less expensive homes started to see “significant declines in activity” after interest rates increases in late March and early April. The luxury segment followed a “step/half step behind” when the stock market fell in May, according to Patrick Carlisle, Compass analyst.
The uncertainty makes it difficult to price high-end homes, according to Nina Hatvany of Compass, who recently listed a Pacific Heights property for $14.3 million. She also said that some high-end homes had unrealistic pricing when they first came to market, and the “dramatic” price drops just represent a recognition that “the original pricing may have been aspirational and not in line with recent comparable sales.”
The high-end homes most desirable to today’s pickier buyers are “very close to move-in ready, have views and/or a direct walk out yard accessed from the kitchen and are on top blocks,” she said. Whereas homes that lack such features are showing to be less desirable to buyers.
It has been hard for some sellers to accept that the market has slowed, she suggested, but many at this price point have the flexibility to pull their homes off the market and wait out the downturn if they don’t get the price they want.
“Supply will continue to be constrained as it always is for the best homes,” she said. “Even when the market slows down.”
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