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Luxury home sales are skyrocketing in the Bay Area right now. The pandemic helps explain why

December 10, 2020
Source: San Francisco Charonicle

Biz & Tech // Real Estate

Luxury home sales are skyrocketing in the Bay Area right now. The pandemic helps explain why

Photo of Annie Vainshtein
Annie Vainshtein Dec. 9, 2020 Updated: Dec. 9, 2020 4 a.m.
 

This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.

This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.
Photo: Compass

Bay Area luxury homes have become a hotter commodity than ever during the coronavirus pandemic — including those at the very top of the market.

After a huge plunge right after shelter-in-place went into effect in March, general home sales have rebounded across the Bay Area. And sales of luxury and ultra-luxury homes in particular have jumped to historic highs in almost every part of the region, according to new data from the brokerage firm Compass Real Estate and the California Association of Realtors.

In the Bay Area, real estate agents define luxury homes as those valued above $3 million and ultra-luxury homes as those valued above $5 million.

According to Compass’ report, luxury home sales in the Bay Area jumped 46% this year. Affluent and ultra-affluent buyers have substantially increased as a percentage of sales since the pandemic began, helping pull up the median prices to record highs for the region as well.

Percentage change year over year in Bay Area home sales.

Percentage change year over year in Bay Area home sales.
Photo: California Association of Realtors.

That data closely aligns with numbers from the California Association of Realtors, which reports that sales in the luxury home sector this year have increased by 41.4%.

The findings underscore the widening equity gap in the Bay Area and beyond: For lower-income groups, the pandemic has upended tens of millions of lives with job and wage losses; for the wealthy, luxury seems even more within reach.

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This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.

1of3This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.Photo: Compass

This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.

2of3This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.Photo: Compass

This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.

3of3This 10,725-square-foot house at 190 Sea Cliff Ave. in San Francisco sold for $24 million on Nov. 12, 2020.Photo: Compass

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Affluent buyers, or what agents call super-affluent buyers, have made up a much larger percentage of the buyer pool since the pandemic struck, said Compass chief market analyst Patrick Carlisle. “They were the ones who were the least affected by the pandemic,” he said.

“What was already a significant divide in social stratification has just gotten much wider. It’s almost like two parallel universes, two completely different realities depending on what class people are in.”

More affordable sections of the market — or units under $1 million — are staying flat or declining. This year, sales in that section declined by 1.1%. Part of that might be because of supply, said Oscar Wei, an economist for the Realtors association. Available homes within those affordable markets dropped by 40% in the last few months. Within the luxury segment, supply increased by 3%.

Carlisle said the findings reflect “stupendous” jumps in outlying counties, including Sonoma — despite this season’s devastating wildfires — and in regions slightly outside the Bay Area, such as Santa Cruz, Monterey and Lake Tahoe. The jump in sales for the latter was more than 180%, he said. (Luxury home sales boomed in Napa and Sonoma but declined in the ultra-luxury market, perhaps due to how many of those highest-end properties are in wildfire zones.)

Percentage change in ultra-luxury home sales in Bay Area counties from 2019 to 2020.

Percentage change in ultra-luxury home sales in Bay Area counties from 2019 to 2020.
Photo: California Association of Realtors

However, not all areas of the luxury market increased: The luxury condominium market saw a decline in sales during the pandemic, according to Compass.