Flood of new units plus high interest rates result in “snail’s pace” for sales
OCT 11, 2023, 11:30 AM
By TRD Staff
https://therealdeal.com/sanfrancisco/2023/10/11/demand-fades-for-luxury-condos-in-san-francisco/
The market for luxury condominiums in San Francisco has fallen into the doldrums.
The city’s exclusive condo market has tilted in favor of buyers as demand fades during an oversupply from hundreds of luxury condos flooding the city in the last five years, the San Francisco Chronicle reported.
Fewer of the city’s new fancy condos in Downtown, where more than a third of the offices stand empty, find takers. Condo prices last summer fell by 10 percent, with inventory up by a third.
Some 79 condominiums at the 120-unit One Steuart Lane remain vacant. 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 sluggish sales may be blamed on higher interest rates, which have forced local and foreign buyers to hit pause on purchases.
If the market doesn’t improve, building owners may be forced to walk away from struggling properties as mortgages come 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. But that was before the pandemic, when there weren’t as many luxury units on the market.
Now high vacancies in some of the city’s most coveted condo towers have become increasingly common, especially in the city’s Downtown
That includes the 146-unit Four Seasons Private Residences at 706 Mission Street. Sales began in 2019 — but only 16 condos have sold.
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 expensive condo sold in 2018 for $4,509 per square foot. Now a third of the building’s condos sit empty.
And 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.”
— Dana Bartholomew
