California is dominating the U.S. luxury home market with seven of its 10 counties ranking at the top, according to Realtor.com’s Luxury Homes Index.
The report, released October 4, identifies and ranks the top luxury markets in North America based on factors of “luxury prices,” “luxury sales volume,” and “luxury market absorption and velocity.” The most recent findings revealed that San Mateo took second place at $2.384 million, followed by San Francisco ($2.383 million), and Marin ($2.154 million), while Santa Clara ($1.83 million) grabbed the sixth spot.
You have to have money to live in Los Angeles, “The City of Angels,” or, rather, the “city of sardines” as travel writer Dana Carmel called Los Angeles due to its jostling for homes. You also have to have money to live in the “Golden City” (San Francisco), or in most other cities in California, for that matter. Luxury home prices in San Mateo and San Francisco rose by 9 percent and 6 percent, respectively, in contrast to the first six months of last year. Alternatively, home prices in Marin dropped 7.1 percent, while prices were flat in Santa Clara.
In early October, Mansion Global reported that California’s luxury market is slowing, while the $3 million to $5 million price bracket is driving the market.
“In the Bay area, $20 million houses will sit there for longer. That market is softening a bit as buyers are nervous about the economy and the election, but the $3 million market is still very active,” Justin Fichelson, star of Bravo’s Million Dollar Listing San Francisco, told Mansion Global.
Several industry experts we’ve talked to who represent the L.A. and San Francisco markets attribute peak prices to being one of the factors that’s making locals pick up and move elsewhere.
Although job opportunities are percolating in vast tracts of California, with San Francisco and San Mateo Counties, for instance, offering more than 47,000 jobs during the last year, job seekers are forced to look for cheaper homes outside the area, according to real estate agent Danielle Schwartzman of Pacific Union/Christie’s International.
The same goes for buyers who consider investing in the ultra-luxury sector.
Zillow recently revealed that as much as 50 percent of local searches for homes tend to roam outside San Francisco. Our correspondents gave various reasons for this, which include limited market inventory and, of course, the expense.
“We read articles all the time about families who are moving out of the city due to the cost of living,” says Schwartzman. “Many of those families would like to stay in San Francisco and raise their children, but with the lack of inventory, they have a difficult time finding affordable homes that meet their needs… It looks like we’ve had a slow-down in our real estate market, and it’s true that 2016 has not seen the frenzy that we experienced in the Spring of 2015.”
This is especially so when homes almost tap the $3 million peak, and where prices hover from $5 million to $6 million on the north side of San Francisco. With most areas of the city selling at over $1000 per square foot, owning a home in San Francisco, Los Angeles, San Mateo, or any part of the Bay Area, for that matter, is a dream for most.
For instance, L.A. also ranked in the top 10 Luxury Homes Index, tagging an average luxury price of $1.337 million, up 3.3 percent year-over-year and 20.8 percent in 2013.
Joyce Rey of Coldwell Banker noted that properties in the L.A. area that were in excess of $20 million were down in volume, but that the five and 10 million-dollar price range was running slightly ahead of the 2015 market, which was the best sales volume on record. This confirmed the Mansion Global observation. She did, however, hasten to add that although the East Coast market suffered a slow-down, probably due to enormously high price-per-square foot asking prices and an abundance of new high-rise construction, the L.A. luxury market was, and is, doing well.
It’s also showing sky-high price tags. Speaking of San Francisco, Schwartzman says, “With more and more people hoping to live in its 49 square miles and surrounded by water on three sides, it makes sense that inventory and affordability are always going to be issues.”
The same can be said for the rest of California, too.