The San Francisco Luxury Home Market

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Paragon Real Estate Group
Paragon Real Estate Group
The San Francisco Luxury Home Market

A Market Trends Overview by the Paragon Real Estate Group

The luxury home segment in San Francisco makes up about 10% of the overall home market in the city (by unit sales; more by dollar volume). One of the most interesting dynamics playing out right now in the SF luxury home market is the large increase in high-tech industry buyers with huge sums of new money at their disposal. Their presence is strongly impacting the market, especially in certain neighborhoods they’ve deemed most appealing. We expect this influx of new, wealthy buyers to continue throughout 2012 in the Bay Area. And, of course, as general economic conditions and confidence improves, we expect that this market segment will become increasingly active and competitive.


We are rather proud to mention that in the new 2012 RealTrends 500 ranking
of the 500 largest residential brokerages in the United States,
Paragon ranked #3 in sales per agent and #4 for average sales price.


Sales Price to List Price Percentage, Days on Market,
Price Reductions & Expired Listings

Most of the luxury homes that do sell, sell relatively quickly at very close to or over asking price — many of these listings are now receiving multiple offers. Those going through price reductions spend a much longer time on market and sell at an average discount of 15% off original list price. And even in a hot market, some listings expire without selling, usually because the market deems them overpriced. (The luxury home market is one that is particularly susceptible to egregious overpricing.) The key to selling a home for the highest price is to price it correctly right from the start, prepare it to show in its best light, market it comprehensively and effectively negotiate the offers received.

San Francisco Luxury Homes: Percentage of Listings Accepting Offers

This statistic is one of the clearest expressions of buyer demand vs. inventory of luxury homes for sale. In the first quarter of 2012, this percentage hit the highest point in several years.

Number of Luxury Home Listings Accepting Offers

In this month by month chart, we can see the acceleration in accepted-offer activity
occurring in the market right now.

Luxury Home Sales by San Francisco Realtor District

The older prestige neighborhoods running across the north of the city from Sea Cliff through Pacific Heights to Russian & Telegraph Hills still dominate sales, but high-end sales in the greater Noe Valley/ Castro/ Cole Valley district have soared since the late nineties, and luxury condos in new developments in South Beach/ SOMA/ Yerba Buena area are also a major part of this market now. These last two areas are particular favorites of high-tech buyers, both for neighborhood ambiance and their locations close to high-tech hubs or highways south to Silicon Valley. (We have separate market reports for these 2 areas.) St. Francis Woods has been an enclave for sales of large, detached houses for quite some time.

Inventory of SF Luxury Homes for Sale

Inventory declines rapidly during the holiday season and then starts to pick up in the new year.
Though inventory is now growing, it is still relatively low in comparison to buyer demand.

San Francisco Luxury Homes: Months Supply of Inventory (MSI)

The lower the MSI, the hotter the market. The current level of MSI
would typically be considered a "Seller’s Market."

SF Luxury Home Sales vs. Listings Expired or Withdrawn

The stronger the market, the lower the ratio of expired and withdrawn listings to sold listings.
That ratio is very low right now.

SF Luxury Home Sales: Average Days on Market (DOM) to Acceptance of Offer

Average days on market is not the most reliable statistic as it can be easily distorted by a few sales, but generally speaking, the hotter the market, the lower the average DOM. Competition for the best listings can be ferocious and many of the most appealing, well-priced homes are now accepting offers within 7 – 14 days of going on market — often subsequent to a competitive bidding situation.

San Francisco Luxury Homes: Average Dollar per Square Foot

Dollar per square foot values, even in the high-end, vary widely from neighborhood to neighborhood. The absolute highest are typically paid for luxury condos in prestige buildings with staggering views and for the most prestigious mansions in neighborhoods like Pacific Heights and Russian Hill. Remember that short-term fluctuations are relatively meaningless — they occur naturally since the "basket" of homes sold varies from month to month, quarter to quarter.

Largest San Francisco Home Sales by Neighborhood

We are seeing some very large home sales in San Francisco.

San Francisco Luxury Home Unit Sales

Besides market demand, the number of sales is also impacted by the inventory of listings available to purchase. Another dynamic of growing importance in this market segment is the increase in sales occurring off-market, i.e. without being advertised or placed in the Multiple Listing Service. These off market sales are not reflected in these 2 charts.

Longer-Term Trends in Values

Sometimes it’s useful to take a step back and look at longer term trends. These charts delineate average sales price (which is different from median sales price) and average dollar per square foot by neighborhood, by year, going back to 1995. Annual statistics are typically more reliable and meaningful than quarterly or monthly stats, because the body of data is so much larger and the normal fluctuations of smaller time periods get flattened out. Even then, some of these neighborhoods do not have that many sales and of the sales, many do not report square footage — thus these statistics must be considered generalities with a fairly large margin of error.


MEDIAN SALES PRICE is that price at which half the sales occur for more and half for less. It can be, and often is, affected by other factors besides changes in market values, such as short-term or seasonal changes in inventory or buying trends. Though often quoted in the media as such, the median sales price is NOT like the price for a share of stock, i.e. a definitive reflection of value and changes in value, and monthly fluctuations are generally meaningless. If market values are truly changing, the median price will consistently rise or sink over a longer term than just 2 or 3 months, and also be supported by other supply and demand statistical trends.

AVERAGE SALES PRICE is calculated by adding up all the sales prices and dividing by the number of sales. It is different from median sales price, but like medians, averages can be affected by other factors besides changes in value. For example, averages may be distorted by a few sales that are abnormally high or low, especially when the number of sales is low.

DAYS ON MARKET (DOM) are the number of days between a listing going on market and accepting an offer. The lower the average days on market figure, typically the stronger the buyer demand and the hotter the market. However, this statistic can easily be distorted by a few sales with very long days on market prior to selling.

MONTHS SUPPLY OF INVENTORY (MSI) reflects the number of months it would take to sell the existing inventory of homes for sale at current market conditions. The lower the MSI, the stronger the demand as compared to the supply and the hotter the market. Typically, below 3-4 months of inventory is considered a "Seller’s market", 4-6 months a relatively balanced market, and 7 months and above, a "Buyer’s market."

DOLLAR PER SQUARE FOOT ($/sqft) is based upon the home’s interior living space and does not include garages, unfinished attics and basements, rooms built without permit, lot size, or patios and decks — though all these can still add value to a home. These figures are usually derived from appraisals or tax records, but are sometimes unreliable or unreported altogether. All things being equal, a house will sell for a higher dollar per square foot than a condo (due to land value), a condo higher than a TIC (quality of title), and a TIC higher than a multi-unit building (quality of use). Everything being equal, a smaller home will sell for a higher $/sqft than a larger one. (However, things are rarely equal in real estate.) There are often surprisingly wide variations of value within neighborhoods and averages may be distorted by one or two sales substantially higher or lower than the norm, especially when the total number of sales is small. Location, condition, amenities, parking, views, lot size & outdoor space all affect $/sqft home values. Typically, the highest dollar per square foot figures in San Francisco are achieved by penthouse condos with utterly spectacular views in prestige buildings.

Median and average statistics are generalities subject to fluctuation due to a variety of reasons (besides changes in value): how they apply to any specific property is unknown. Averages may be distorted by one or two sales substantially higher or lower than the norm, especially when sample size is small. Sales not reported to MLS – such as many new-development condo sales — are not included in this analysis. All figures should be considered approximate and are derived from sources deemed reliable, but may contain errors and omissions, and not warranted.


Contact us anytime for assistance, information and resources regarding living in San Francisco.
Paragon Real Estate Group
(415)738-7000 | (415)565-0500 |
Christopher Stafford
DRE# 01155105
1400 Van Ness Avenue
San Francisco, CA 94109
Direct (415) 701-2630
Fax (415) 701-2680
[email protected]
Terry Wright
DRE# 01185918
1400 Van Ness Avenue
San Francisco, CA 94109
Direct (415) 701-2631
Fax (415) 701-2681
[email protected]


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