Q1 in Pacific Heights

Q1 in Pacific Heights was everything we expected after a frenetic 2021 campaign; fast, competitive and seemingly ever-increasing in value.

The condominium market eclipsed a $2,000,000 average (for a quarter) for the first time ever. Days on market keep decreasing, and buyer demand hasn't shown any signs of cooling off with rising interest rates.

The median market for single family homes is trending upward at a rate I’d argue has rarely been  seen worldwide; up $400k Q1 '22 vs. 2021. Listings are becoming more and more scarce, and demand is unwavering for homes in the local market.

The luxury market saw 2 mega-sales in Q1, averaging just over $14,000,000. Similar to the median, supply is drastically limited, but the market seems to be as stable (and continually growing) as any luxury asset throughout undulating markets.

The Condominium Market

The Pacific Heights condominium market continues to tear through all previously established highs, eclipsing the coveted $2M condominium average for the first time in history over the span of an entire quarter.

37 sales at an average of $1,344/foot is a blistering start to a year. With demand at an all time high and days on market continually trending downward, it seems the market has fully re-established itself. Micro-markets with extreme desirability like Pacific Heights tend to hold firm during the early phases of a downturn, so I wouldn’t be surprised if the condominium market continues trend upward throughout 2022.

The Median Market

For the purposes of defining the line between the median market & the luxury market, $2,000,000 above or below the median at the time of this report is considered the market for a median home, whereas anything $2M above or greater tends to correlate better to the luxury market. Obviously, an argument could be made that there is a buyer pool for every property in the neighborhood up to ~ $40m, but for simplicity, let’s batch.

The median home value in Pacific Heights is up $400,000in Q1, averaging $7,652,000.

There are few markets in history that have achieved such a meteoric rise over a short period of time. For context, the median single family home price in 2019 was $7,000,000, indicating a $300,000 gain per pandemic year in asset value. Although there were few sales, the demand for the properties that do come available seems insatiable.

Similar to other markets, San Francisco locals have had a challenging time capitalizing on the market gain, because if they sell they're put in the predicament of then competing with the demand to secure the next property. Only second home owners & those leaving town have been truly able to capitalize.

The Luxury Market

The luxury market in Pacific Heights is a stalwart in global real estate. The '08 crash couldn't phase it, a pandemic barely rattled it. It's notorious for value stability and growth.

With only 2 sales on record at an average of $14,000,000, it's hard to predict any decline in the demand for world-class properties here.

Projecting Ahead To Next Month/Quarter

With all three markets increasing in value over Q1 '22, it's pretty safe to assume continued growth through at least the end of the Summer. The fed has projected 5 to 6 more rate increases between now and the end of 2023, signaling there may be an end in sight to the current rate of growth.

With that in mind, the table is set for an explosive Spring, Summer & Fall '22 markets.

Homeowners would be wise to consider their holding timeline beyond 2023 with the expectation of buyer’s purchasing power to be more restricted in the relatively near future.

Buyers will need to take the bull by the horns and capitalize on securing a property while rates are digestible. If/once we start seeing rates north of 5% consistently, even though historically still low,, I have a feeling many buyers will have the expectation of landing a property out of their price range, that 6-12 months earlier may have been attainable. My advice; Compete & win the bidding war on any property with novel features that will appreciate well; location, views, backyard, private outdoor space, etc.