Luxury Took the Lead in the Second Quarter, According to Compass
Residential sales prices in San Francisco surged to new peaks in the second quarter of 2019, according to a report Monday by Compass.
The median price of a home in the city was $1.65 million, up $80,000 from the previous record in the second quarter of 2018, stated. Condo prices were also up slightly compared to the previous year, with a median price of $1.26 million.
San Francisco’s market was fueled by “macro economic factors” such as the flourishing stock markets and low interest rates, said Patrick Carlisle, Compass’s chief market analyst in the San Francisco Bay Area.
But the city also saw “a cluster of unicorn IPOs,” he added, with 10 to 12 launching this spring, including Uber, Lyft and Slack. That put more money in the pockets of employees, which translated into rising real estate prices, Mr. Carlisle said.
There were also more buyers in the luxury and ultra-luxury markets, he explained. Until recently, the more affordable home segments were also the strongest performing.
Suddenly this spring, luxury took the lead,” Mr. Carlisle said. “And when there are more homes selling for higher prices, that pulls up the median sales price.”
In fact, 34 homes priced at more than $5 million were sold in the second quarter of 2019, compared to 28 in the second quarter of the previous year, the report stated.
Sales of lower-priced luxury homes were also up. In the $2 million-and-up range, there were 122 sales in the second quarter of 2019, compared to 103 in the second quarter of last year, according to Compass. And 98 sold for between $3 million and $5 million, compared to 78 the previous year.
Mr. Carlisle said the “IPO effect” benefitted the cities of San Francisco and Oakland, plus San Mateo County, the most. These areas saw the biggest price increases, with prices going above their Q2 2018 peaks. Other markets in the Bay Area did well, but the numbers weren’t close to the peaks of the second quarter of 2018, he added.
The spring season is typically the best for the San Francisco market, according to Mr. Carlisle. The second quarter of 2018 was a “crazy-hot market,” he added, but the city saw a significant slowdown in the second half of that year because of higher interest rates and the slumping stock market.
Compass also reported the median house sales prices for the entire Bay Area. Pacific Heights was the priciest neighborhood in the city, with a median sales price of $5.2 million. Atherton, California, in San Mateo County, ranked the most expensive in the larger Bay Area with a median sales price of $6.6 million, according to the report.
“I don’t think this quarter was a crazy as last year, but it’s pretty close,” Mr. Carlisle said.