Buyers Come Back to SF’s Ultra-Luxury Home Market

Ultra-luxury home buyers are finally getting off the sidelines and back into the market, according to agents and data for a slew of October sales.

Three listings on one of San Francisco’s few private streets all came to the market within the last month and found buyers within weeks, even though the least expensive was listed at $7.9 million.

That home, 5 Presidio Terrace, ended up selling for $850,000 over the asking price — a sign that high-end buyers are ready to get aggressive to close deals after more than a year of ambivalence and sluggish sales.

The agent for the buyers, Greg Fulford of Sotheby’s International Realty, said his long-standing clients had searched for a “distinct property” in Presidio Heights. The four-bedroom’s wood-shingled exterior — designed by Legion of Honor and Clift Hotel architect George Applegarth in 1908 — leaded- and stained-glass windows, and intricate woodwork gave them the “elegant period details” they wanted while the 11,000-square-foot lot affords a rare amount of private outdoor space in the city.

“Such properties seldom come to market, perhaps only once in several decades, making this acquisition highly competitive with numerous buyers vying for it,” Fulford said via email.

Fulford also represented the buyers at 2600 Green Street, a Pacific Heights five-bedroom, six-bath built in 1916 which sold for about $300,000 over its $8.5 million asking in October as well.

“Buyer mentality” shift

The market has seen a “surge in activity” in the $7 million-plus price point since October began, according to Patrick Carlisle, chief market analyst at Compass. Five San Francisco listings in that price range have gone into contract and five more had closed as of Oct. 25. Days on market on all of the deals were as low as four days and only as high as 38.

“It looks like demand has rebounded to a significant degree during the autumn selling season,” he said via email. “Buyers have responded to a number of newer listings, clearly deeming them appealing and well-priced.”

October is always a hot month for new listings and sales in the luxury market, Carlisle said, as listing agents know they have a short fall window to get buyers’ attention before the market screeches to a halt around Thanksgiving and doesn’t pick up again until the first quarter of the next year. With a few days left in the month, Carlisle said this October is on track to beat last October, when the market was in a tailspin and millions were cut from luxury listing asking prices to induce sales.

Last fall, conversations with high-end buyers centered around concerns about dropping property values, while this fall it’s all about finding the right place, said agent Joseph Lucier of Sotheby’s International Realty.

“The shift in buyer mentality this fall compared to last year is noticeable,” he said via email.

Lucier and partner Stacey Caen represented the buyers of 2430 Broadway. Location and unobstructed bay views were “non-negotiable criteria” for his clients, Lucier said, and the five-bedroom, five-bath has both. When he heard that the home, which he knew “intimately” since he repped it when last traded in 2013, was coming to the market this fall, he was able to get in two weeks before it was listed. His buyers put in a full-price offer of $12.5 million the first day the home went up for sale, he said, underscoring the “necessity of working with an agent who is a go-getter and has a powerful and trusted relationship network in the market,” even while it is still recovering.

Cash market

There are about 60 properties priced at $7 million and up on the MLS that are listed as active or coming soon, Carlisle said. That’s a relatively high number to choose from for this price point in the city, even as the rest of the market contends with record-low inventory. About one third of those properties have been on the market for four months or longer.

“The high-end market is still soft, but valuation points have been identified for buyers to purchase with more confidence,” Lucier said, adding that there is a “mobilized group” of 15 to 20 buyers all targeting the $10 million-plus single-family home market on the north side of the city.

For this buyer pool, the high interest rates that have roiled the rest of the market are of little consequence.

“There is still a tremendous amount of cash in the Bay Area residential market and people need homes,” Lucier said. “With interest rates at their highest levels in 20 years, cash is king and cash is setting the market.”