Real estate agents said elevated interest rates are making even wealthy buyers hesitant to make big purchases, keeping this year’s number of headline-making home buy luxury purchases below the boom times of recent years.
Amaya Edwards/The ChronicleSix bedrooms. Ten bathrooms. Nearly 10,000 square feet. And it only cost $34.5 million.
The price of that Presidio Heights mansion, sold in March, was the highest for any publicly listed home in San Francisco this year. For most residents, it’s a prohibitively expensive property, many times higher than the city’s typical home value of $1.25 million.
But the sale, at 3450 Washington St., reflected a more than $10 million price drop from the original $45 million list price tag, which last year was one of the highest list prices in San Francisco. It spent more than 120 days on the market before finding a buyer, according to data provided by Compass Real Estate.
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The second-most expensive home sold in San Francisco through November this year was another six-bedroom house in Pacific Heights, costing $23.5 million. Compass’ data doesn’t include homes that were listed privately.
Multimillion-dollar home sales in San Francisco have been more common in recent months than in early 2023, according to data from the real estate broker Compass. But local real estate agents said elevated interest rates are making even wealthy buyers hesitant to make big purchases, keeping this year’s number of headline-making home buy luxury purchases below the boom times of recent years.
The number of San Francisco homes selling for at least $5 million surged at the same time other listings did, in 2021 and the first half of 2022. Fueled by low mortgage rates, limited inventory and a flurry of migration, the housing market in the Bay Area and the rest of the country rapidly grew more expensive. Between September and November 2021, San Francisco saw 58 homes sold for at least $5 million, and eight sold for at least $10 million.
“Money was cheap, and people knew it,” said Karen Mendelsohn Gould, a Compass real estate agent. “It was easy to get money, it was easy to do a transaction — everybody was in a good mood.”
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But in late 2022 and early 2023, the market slowed substantially, due in large part to rising interest rates. Even after a recent uptick, just 29 San Francisco homes sold for at least $5 million between September and November 2023, with six selling for at least $10 million. Both tallies were slightly higher than pre-pandemic levels.
Nationally, high-end home listings have crawled upward even as non-luxury home inventory has fallen, according to Redfin. The real estate brokerage site found that the number of such homes sold in San Francisco and San Mateo County increased by nearly 10% between the third quarters of 2022 and 2023. Redfin defines luxury homes as those valued within the top 5% of their metropolitan division.
Those trends might not hold for every price point, said Val Steele, a Compass real estate agent. Buyers looking for a home between $5 million and $8 million, she explained, are often much more vulnerable to interest rate hikes than a buyer paying cash for a $20 million house.
More than 40% of luxury homes that sold nationally in the third quarter of 2023 were purchased in full, Redfin said, compared to just 28% of non-luxury homes.
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Real estate agents have previously told the Chronicle buyers are also sensitive to the state of the stock market, which has started climbing in recent months. That’s left “fantastic homes” sitting on the market unsold.
“In past years, if it was a good house, it was gone,” Gould said. “[Now] the math just isn’t aligning for the buyers.”
Reach Christian Leonard: Christian.Leonard@sfchronicle.com
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