Fourth Quarter, 2011
2011 has proved to be a year of contrasts - and the year has nearly 6 weeks remaining at the time of this writing. Netting out the contrasting elements, here are some of my personal observations:
• It has been a year of strong sales in luxury single-family homes between $3 million and $6 million, especially those that have been fully renovated to today's transitional tastes. Multiple offers have abounded and well-priced properties have gone over asking price by 5% and more. 37 single family homes in this price range sold on the north side prior to Thanksgiving.
• $6 million to $10 million properties have not sold as rapidly, yet there were 10 closings in this range on the north side.
• In the ultra-luxury market, a $33.9 million Pacific Heights listing was sold for $29.5 million, the buyer was represented by a Sotheby's agent in our office.
• While view properties are in high demand as always, those view properties in less than A+ condition have not flown off the market. Nor have the ultra-moderns and certainly not those that were perceived to be overpriced.
• At the same time, condos and some co-ops are languishing with prices lower than 2009 levels (in some cases as low as 2004). Buyers are insisting on their complex wish lists. Here, it takes commitment and patience on the part of sellers.
• "Fixers" that need a lot of work and are "priced to move" are in great demand and sell quickly with multiple offers driving the prices significantly over asking. Most of these houses, however, are not priced attractively enough for the speculative developers who are forced to find more creative solutions for their projects (such as two-unit buildings they can convert to single family houses with an au pair). This is good news for buyers who want to renovate and hold.
• 2011 continues to show inventory shortages in most slices of the market in San Francisco's most desirable neighborhoods. Counterintuitive, but true.
• The use of pocket listings persists, allowing listing agents to "float" out a property before accumulating time on market on the Multiple Listing Service (MLS). Too long a pocket listing period, however, telegraphs an uncommitted seller. Exception: there typically will be December pocket listings of choice properties waiting for the New Year to "go live" on the MLS. Top Agents will have access to these opportunities in advance.
• Thursday afternoon is the new unofficial brokers' Preview time, thus allowing agents multiple opportunities to shop for their buyers while showing their own current listings. Often only the Top Agents learn of these Previews, and some of those properties are in contract before the rest of the market learns of them.
• Multiple offers are back in all segments of the market when a property is priced slightly below the perceived market value. The big risk is in overpricing.
What do I mean by "transitional" tastes? Just a couple of years ago, the most desired architecture was ultra-modern, but now luxury property buyers in the various generations are favoring more "transitional" residences - clean lines, unique subdued finishes, large scale but simple moldings inside smooth integral-color hand-troweled stucco exteriors or a monochromatic Victorian. These are interiors that will showcase furnishings and art ranging from ultra-modern to an eclectic mix. Today's most desired floor plans incorporate indoor-outdoor living from the main entertaining rooms of the house.
What are "San Francisco's best neighborhoods"? That depends upon your perspective - it is both about visual beauty and retention of value during market swings. My emphasis has always been on the north side of town - Pacific Heights, Cow Hollow, Marina, Russian Hill and Telegraph Hill. The Marina, my home neighborhood, enjoyed four MLS-listed and two private sales in the $3 million to $6 million range so far this year, with two more good properties listed, but not yet sold. Noe & Eureka Valleys are other neighborhoods that benefited strongly this year from pre-IPO and IPO activity in the tech sector, especially among those who commute to the Peninsula.
Where are the buyers coming from? Everywhere! There are many cash buyers and they hail from right here, our outlying counties and elsewhere in the United States, yet also from Asia, Canada, Europe and South America. Baby Boomers and those slightly younger are returning to the City now that their children are adults. Those Boomer purchases are often a downsized primary residence, but not always. Couples are indulging themselves in that view property they never had or the services of a doorman. Walk-ability to great neighborhood shops and restaurants is high on their lists. And, smart money managers are advising their clients that the San Francisco luxury real estate market may just well prove to be the wisest place to invest.
Does all this sound complicated and contradictory? Once again, this is a time when market savvy and experience make all the difference in the world. Experience and knowledge can pay dividends to sellers and lack thereof can put buyers out in the cold. Having the personal advice and dedication of a well-informed Realtor® will make all the difference.
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