Luxury buyers continue to drive sales.
Luxury buyers will likely continue to drive San Francisco sales, as the Bay Area consistently ranks as one of the fastest growing areas for homes over $1 million.
“It is encouraging to see that despite the financial market’s volatility and the impacts on tech companies, higher-price buyers are still encouraged and moving forward,” said Selma Hepp, a chief economist at Compass in San Francisco, in her latest report.
Sales of homes priced over $2 million have grown by 16% from a year ago in San Francisco, according to the same report. Growth in luxury transactions has increased even more in San Mateo County, which makes up part of Silicon Valley.
Shifts in the tech industry could provide the fuel that keeps the luxury market moving through 2019. The IPO pipeline is amassing an impressive list of companies ahead of the new year, as major San Francisco-based firms like Uber, Lyft, Slack and Airbnb file plans to go public next year.
“When startups go public, they can pour additional, immense quantities of new wealth into the pockets of founders, investors and employees—and then into the surrounding economy,” said Patrick Carlyle, another market analyst with Compass, in a report from December.
By contrast, things have slowed at the margins of luxury, where rising prices and a 75-basis point rise in mortgage rates over the past year have hit buyers in the market for homes around $1 million with a one-two punch. Some have had to lower their budgets, while others dropped out of the market completely, said Polaris Pacific’s Managing Partner Garrett Frakes.
Nevertheless, Mr. Frakes said: “We’re seeing a lot of resiliency at the medium to high end, and it’s not affecting people coming in with all cash.”
Prices will likely continue rising in the city’s limited and pricier single-family home market, while the less expensive condo market may see some softness in both sales and price growth in 2019, Mr. Frakes said.
Read more at Mansion Global.