San Francisco luxury condos experience a decrease in demand
As recently reported in the Real Deal, the market for luxury condos in San Francisco has fallen significantly. The city’s condo market has been in favor of buyers while demand fades during an oversupply from hundreds of luxury condos being built in the city in the last five years, according to the San Francisco Chronicle.
In downtown, where over a third of offices are vacant, there are fewer takers of the city’s new fancy condos. Last summer, condo prices fell by 10 percent with inventory up by a third.
About 79 condominiums at the 120-unit One Steuart Lane remain empty. The 20-story highrise, which opened in early 2020, had sold homes for as much as $11.5 million.
“In the last 12 months only one unit has sold, which is a snail’s pace,” San Francisco real estate broker Mike Basham told the Chronicle regarding One Steuart Lane.
The slow sales may be due to higher interest rates, which have forced local and foreign buyers to pause from home purchases.
If the market does not improve, building owners may be forced to walk away from struggling properties as mortgages are due.
Luxury condos can take longer to sell than other homes, according to the Chronicle, with some owners standing pat in order to achieve desired pricing. That was before the pandemic when there were not as many luxury units on the market.
High vacancies in some of the city’s most desirable condo towers have become very common, especially in the city’s Downtown area. That includes the 146-unit Four Seasons Private Residences at 706 Mission Street. These began selling in 2019, but only 16 condos have sold since then.
At the 242-unit Serif at 960 Market Street in Mid-Market, where less than a third of the condos have sold, Basham said.
At the 70-story tower at 181 Fremont Street, 67 condos make up the top 17 floors, where the city’s most pricey condo sold in 2018 for $4,509 per square foot. Currently, a third of the building’s condos sit vacant.
At the Avery, a 57-story luxury highrise at 488 Folsom Street, 118 condos make up the top floors, with more luxury units below.
While the bottom floors are 96 percent leased, just 66 of the condos have sold, with only three units trading this year, according to Matt Witte, a principal at Related California, the developer of the Avery.
“It’s clearly the case that things slowed down last year, and further slowed down this year,” Witte told the Chronicle. “Overall, I think the market is pretty clearly down, and the Avery is a victim of that.”
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