The familiar trend of high sales prices coupled with low sales volume carried over into this year’s first quarter, although the particulars were a bit more pronounced than in quarters past. Most notably, the three highest-priced counties we cover all eclipsed their previous average sales price records, with San Francisco’s $1.64 million average sale redefining an already sky-high ceiling.
The Mid-Peninsula’s $1.531 million average home sale and Marin County’s $1.414 million were the other two benchmark figures. San Francisco’s condominium sector also set a new high of $1.234 million on the average unit, up 19 percent year-over-year and more than six figures higher than the previous record set in Q2 2014. In all, these three counties saw more than 40 homes sell above the $5 million mark, including a sale of nearly $24 million in San Francisco’s Pacific Heights.
These numbers speak directly to the type of luxury-focused buyer that continues to make a large footprint on the Bay Area market. Those looking for luxury properties—defined by the top 10 percent of all homes sold in a given area—showed increased confidence this quarter. While sales volume tallies were down by at least 9 percent year-over-year in five of the seven counties we represent, this quantitative shortcoming was offset by high-end properties spelling major cash gains.
The average luxury sale in San Francisco, for example, was up a notable 26 percent year-over-year. And while the big counties showed impressive numbers, the East Bay also contributed to this trend. Its average luxury sale of $1.698 million was a 12 percent gain. Just as importantly, this took place while the 367 East Bay luxury sales outpaced last year by 4 percent.
The reasons for this shift toward the upper-tier are manifold, but can by and large be pinpointed to a booming national and local economy and a prolonged track record of upward growth within the real estate market. “We continue to expect the economy to drag housing upward as we move into the second quarter,” said Fannie Mae Chief Economist, Doug Duncan in a late-March report. “The economy is getting a boost from the strong employment numbers we’ve seen last year and at the start of 2015. When this employment growth partners with income growth and consumers experience a rise in their personal household income, we should see a similar boost in the housing sector.”
Because of this, potential buyers are increasingly seeing luxurious Bay Area properties not just as primary residences, but as investments that can offer more return than what the U.S. stock market has shown as of late.
As we look to the second quarter, limited inventory will persist. However, the market should open up generously due to both the spring selling season and sellers being incentivized by this quarter’s record-setting sales prices. For those willing to pay top dollar, a sizeable portion of properties will be available, both of the luxury and more affordable varieties.
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