Sales of S.F. homes over $3 million picked up in January. Is it a sign or an anomaly?

February 21, 2024

Pricier homes in the city have been selling faster to start the year than they did the year before, but the bump might not last, according to new real estate data and analysis of current market conditions.

Sales of properties worth $3 million or more were up over 70% in January compared to the same month in 2023, according to Compass Chief Market Analyst Patrick Carlisle, who also noted that open-house visitor numbers have surged along with the number of homes going into contract.

After hitting a low point in December, new listing activity picked up in January with the number of new listings rising about 14% from January 2023, according to a new Compass data.

However, Carlisle also noted that the 70% increase “may or may not be an anomalous spike.”

KW Advisors agent Jennifer Rosdail told me she sees the market “picking up in fits and bursts” as opposed to a steady climb. She said a December decline in mortgage rates by close to an entire point was quickly cancelled out in January, a change that might have contributed to that January sales increase in the city. Another possible explanation for the increase, she said, is that single-family home inventory is now climbing up again, sending those buyers on the sidelines waiting for the right listings into action.

Rosdail gave an example of how she just showed a $3.5 million home in the Richmond District on Presidents’ Day to a couple who had been looking in the city for 10 months. “They want a big house in the Richmond District under $4 million,” she said. “When one pops up, they go see it.”

She said there’s solid competition for the best houses — which are typically around $3 million and up in San Francisco — but they are still not selling at as high of a price as one might think.

Sotheby’s International Realty agent Joe Lucier, part of the CaenLucier team with broker Stacey Caen, told me he thought that the January increase could be directly correlated with Wall Street, and more precisely, how the S&P 500 has risen more than 20% compared to where it was in mid-February 2023.

“i do think it has a lot to do with the stock market — there are a lot of people who are invested in tech in the Bay Area. It’s a lot about how people feel,” Lucier told me. “This time last year we had no idea where the market was going. Now we believe the market has found its floor over the past 12 months.”

The median house sales price in January was up about 2% year over year to $1,575,000, while the median condo sales price in San Francisco in January 2024 was up about 1% to $1,057,500, according to Compass data. Of the listings for sale on Feb. 1, 28% were houses and 72% were condos, co-ops, TICs and townhouses.

“I definitely see a lot of optimism in the market in general and it’s very clear all around that the market will be much more active in 2024 versus 2023,” Avenue 8 co-CEO Justin Fichelson told me. “Rates are trickling down and certainly stabilizing and buyers and sellers are definitely feeling more comfortable with the market. It’s without a doubt going to be a much more active market in the city this year than last.”

Other finger-in-the-air evidence to suggest newfound buyer confidence can be seen at 2623 Divisadero St., which listed in 2022 and again last fall but failed to find a buyer. But after just two weeks on the market in 2024, the luxury home landed in contract for $7.9 million and is currently pending. The listing agent is Carrie Buchanan-Goodman with Sotheby’s International Realty.

For condos, the supply of those listings is considerably higher than home listings, and while condo and house sales numbers are similar, condo inventory is 130% higher. But condo market conditions also appear to be heating up in 2024, with market condition varying significantly between neighborhoods. Carlisle said one of the big questions in 2024 is how many homeowners having held off listing their houses since mid-2022 will actually move forward with selling.

In terms of listings accepting offers, year over year, the number of accepted offers in January 2024 was up more than 30%. The number of new listings in 2023 was the lowest in decades.

Over the past 12 months, approximately 57% of San Francisco houses sold between $1 million and $2 million, most of them with 2 or 3 bedrooms.

Generally speaking, the percentage of all-cash purchases in 2023 has been running at its highest rate in nine years.

Statewide, the California Association of Realtors forecasts that compared to 2023, the number of state home sales in 2024 will increase 23%, the California median house sales price will rise 6.2%, and the average 30-year mortgage interest rate will decline to 6.3%