The development pipeline is slow as planning approvals are complex and construction costs are high
Photos: Brian Kitts
Housing demand is cooling in San Francisco’s luxury market following a record-breaking streak of sales in the second quarter of 2021, but prices are refusing to retreat in tandem.
The luxury market, defined as properties that are selling for $3 million or more, recorded only 20 sales in the second quarter of 2022, down by half from the second quarter of 2021, according to Compass’s New Development Market Watch report.
But Krysen Heathwood, senior managing director, Compass Development Marketing Group, Western Region, said that the figures do not represent a weak market.
“Desirable homes are still selling at or above asking price, and days on market are still very low, showing that demand is still solid,” she said, adding that although prices are starting to decline, they still remain higher than pre-pandemic rates in most areas.
She noted that potential purchasers are “sitting in the waiting room to see what happens next with interest rates and the stock market. That said, many buyers recognize that rates are still very low and are buying real estate now.”
There are only 28 new luxury condo developments in the pipeline, according to the report. The approximately 1,000 homes available in these new projects, Ms. Heathwood said, “is historically on the lower end” because “in 2007-08, we had around 3,500 condo units available. The dearth of housing inventory remains.”
The lack of many new developments is, she said, a reflection of the “arduous process” of bringing them to market. “Planning approvals are complex, construction costs are high, and the supply chain is challenged,” she said. “These are not new challenges to the housing conversation albeit in the past two years, it has been exceedingly difficult to bring developments to market in part due to the pandemic.”
Those who are buying place a priority on security and walkability, which tied for the No. 1 spot on Compass’s biannual Sentiment Survey on the most desirable amenities across the Bay Area.
Community space to socialize and work is in second place, followed, in order, by EV charging stations and fitness and well-being amenities such as gyms and yoga studios.
The new developments, Ms. Heathwood said, have responded by incorporating these elements.
She noted that the city’s two newest luxury neighborhoods—Yerba Buena Island and Treasure Island— are attracting a lot of interest because “they will offer a highly desired lifestyle on the water, an easy commute via the ferry and have rare natural surroundings. This is the place to be now and in the future.”
Hannah Row, 1545 32nd St., Oakland, West Oakland’s Clawson Neighborhood
This boutique collection of 36 one-, two- and three-bedroom condos and 11 live/work houses in the developing Clawson, aka Dogtown, neighborhood draws inspiration from the surrounding warehouse architecture of the community.
Sales are scheduled to launch in December or January.
Number of Condos: 47
Price Range: To be determined
Architect: Madison Park/Levy Design Partners
Condo Sizes: 875 to 1,160 square feet
Amenities: A landscaped courtyard with seating, a gallery-space building entry, open-air corridors to the homes, package storage and EV charging stations.
Although there are not a lot of new developments now, there still are choice units left in projects, such as this one, that launched sales earlier.
The Bristol at Yerba Buena Island, Yerba Buena Island
Photos: Brian Kitts
Yerba Buena Island, which is named after the naturally formed island in the San Francisco Bay, is a collection of distinctive townhomes, flats, condominiums, penthouses and estate homesites.
The Bristol, the first building to open, features luxury condos.
The development, which is minutes from the Financial District and the Treasure Island ferry terminal that is devoted to downtown commuters, is designed to bring nature, wellness and community into one setting, which, according to agent Ryan Fay of FM Partners, is a priority for purchasers in the wake of the pandemic.
“The emphasis on urban planning, stunning architecture and design, along with being nestled among trails and parks, will make this the most unique and tranquil development within any major city worldwide,” he said.
Noting that the development “seamlessly integrates its surroundings to give its residents a sense of belonging,” real estate agent Omar Maissan of FM Partners, which has worked with Yerba Buena Island developer Chris Meany, said that it’s like “stepping onto an island resort. The exterior finishes are meant to give that feeling of natural serenity and the look of being weathered by the salty sea air. Details that stand out include the silver hue that will become apparent on the wood used over the years, oil-rubbed bronze fixtures that will have varied coloration in areas that receive contact, and even the stucco will get a deeper mottled hue over time.”
Sales launched in February 2021.
Number of Units: 124
Price Range: Starting at the mid $700,000s for studios, from around $1 million for one-bedrooms, from around $1.6 million for two-bedrooms and from around$3.6 million for three-bedrooms
Developer/Architects: Wilson Meany/Anne Howerton and Tim Slattery of Hart Howerton, Jon Ennis of BDE Architecture, Vivian Lee of Edmonds + Lee, Gray Davis of Meyer Davis, Kent Chiang and Roslyn Cole of Aidlin Darling Design, Cliff Lowe of Cliff Lowe Associates, and Lauren Stahl of CMG Landscape Architecture.
Condo Sizes: 630 to 2,248 square feet.
Amenities: The Yerba Buena Island development has 72 acres of parks, including a park that will crown the island’s peak and is designed by landscape and public artist Walter Hood, a recipient of the 2009 MacArthur Genius Grant award; a calm sandy beach and five miles of hiking and biking trails. For residents, there’s a private, three-story gathering place, the Island Club, that features fitness equipment, a yoga studio, lounges and an outdoor lap pool.
Via Mansion Global