When I began selling San Francisco real estate two decades ago, my mentor shared a wise lesson: “always know what is going on in the luxury segment of the market”. Everyone likes to know about those amazing homes. So, what has happened in the $5M+ market during COVID and stay-in-place?
As shown below, and not unexpectedly, the supply of homes in this segment has increased over time. Interestingly, demand has not. This means that the average home, even before COVID, is staying on the market longer.
Sellers in the ultra-luxury market over the last two decades have been opportunistic, meaning they often don't have to sell if they don’t receive a satisfactory price. COVID, combined with supply strongly outpacing demand, will change this dynamic and, in my opinion, has brought us to an inflection point. Selling now at a lower price than in the last few years and investing money in other ways could be better than waiting to sell in the coming years as our market appreciation trend may also be at a turning point.
The last time we had these conversations with sellers was after Lehman Brothers crashed in the fall of 2008. As a seller, I would ask my agent how much they think the home is worth, but more importantly what their plan is to get the highest price. The lesson our team has learned is that it is even more important than ever to present houses in the best possible light. If, as an owner, you really want to sell your home, investing in your home – staging, painting, landscaping – is essential to ensure your product is perfect and is marketed the right way. Your home should stand out to buyers above the rest of the growing supply of homes.
Homes over $5M do continue to sell, as illustrated by the graph below. I’ve previewed the majority of the current inventory with buyers who now have more choice than ever. Based on this and previous experience, our team remains convinced that properties presented and marketed most beautifully continue to sell and even receive multiple offers, as they do at all price points in the San Francisco market.