California | Luxury always finds a buyer

It’s a market that regularly makes headlines in the American press: that of luxury real estate that sells…or doesn’t. In the spring, a “megamansion” in Los Angeles sold for less than half the asking price ($126 million for 100,000 square feet).⁠2 and 42 bathrooms, all the same). Could Luxury’s Setbacks Herald the End of an Era of Housing Surplus in California? Nothing is less safe.

Posted at 12:00 p.m

Annabelle Nicoud
special cooperation

(San Francisco, California) Los Angeles, the city of all excess, boasts a vast real estate portfolio of properties, each more extravagant than the last, as the real estate reality show’s loyal fans know all too well. Sell ​​sunset.

Further north, San Francisco lies in the heart of the most expensive real estate market in the United States. With Silicon Valley right next door and a median annual household income of $113,000 — compared to $47,000 for the entire United States, according to 2021 figures — San Francisco has seen real estate prices skyrocket since the early 2010s .


PHOTO CARLOS BARRIA, REUTERS ARCHIVE

San Francisco is at the heart of the most expensive real estate market in the United States.

Luxury in abundance

“We have a lot more demand than supply,” summarizes Isabelle Grotte, a French-born realtor who and her team made $195 million in real estate transactions in San Francisco last year. With its famous hillsides and hills, the city actually offers little untouched land on which to build castles.

The price range for real estate in the most enviable areas varies from $17 million to $25 million. Which seems modest next to the steroid mansions of Southern California.

This does not prevent more luxurious properties from appearing on the market on a regular basis.


PHOTO FROM COMPASS WEBSITE

Actress Sharon Stone’s former home is currently up for sale for $39 million.

For example, actress Sharon Stone’s former home, which dominates Baker Beach’s waterfront in the chic Sea Cliff neighborhood, is currently up for sale for $39 million. For that price, you get slightly dated Italian decor, stunning views of the Pacific Ocean, the Marin County Mountains, and the Golden Gate Bridge, and all the beachgoers basking at the foot of the villa’s stairs as the nice weather returns. We have experienced it.

Different neighborhood, different excesses: In Russian Hill, atop the hills that make San Francisco so charming and famous, a double penthouse once owned by former Secretary of State George Schultz is selling for $29 million. This has more than 5800 square meters.⁠2 Living space and floor to ceiling windows with panoramic views of the bay. For more cost-conscious millionaires, it is possible to purchase either of the two units that make up this penthouse.


PHOTO FROM THE SUMMIT PENTHOUSES WEBSITE

In Russian Hill, atop the hills that make San Francisco so charming and famous, a double penthouse once owned by former Secretary of State George Schultz is selling for $29 million.

Post Pandemic Market

Post-pandemic, the real estate market continues to grow despite the end of mandatory office work announced by major employers in San Francisco – notably Airbnb and Pinterest: +11.7% growth in one year for San Francisco, 21.3% in Santa Clara County (the includes much of Silicon Valley) and Alameda County near Oakland.

That of luxury follows the evolution of prices in the average market, which is still around $1.9 million for an average single-family home, according to real estate website Zillow.

“A house that would have sold for $900,000 three years ago is now selling for more than $3 million,” observes Jen Passetti, a real estate agent from San Francisco. If you enjoy browsing Zillow, note that the prices shown never reflect the retail price in San Francisco. “It’s a price that can cause a tsunami: we’re exhibiting much lower to attract more buyers and generate interest and emotion,” explains Herr.me Passetti. As a result, single-family homes sell in less than a week on average, with a bid premium that can run into hundreds of thousands of dollars.

Continuous increase

Rising interest rates shouldn’t slow this housing frenzy in the San Francisco Bay Area, as well as in several hot markets in the United States (Austin, Texas in particular).

In 2007, Ted Stroll bought a $600,000 home in a modest neighborhood in San Jose, one of Silicon Valley’s most affordable cities. Today, the retired California Circuit Court of Appeals attorney believes it’s worth more than double that. “If I were still working, I wouldn’t be able to shop in San Jose today,” Stroll said. Unfortunately, mortgages are so high that many people cannot retire or have to move. It’s a big problem. »

Nonetheless, the uptrend is likely to continue, according to Zillow forecasts. “Our modeling projects a further 16.3% price increase through February 2023,” said Jeff Tucker, senior economist at Zillow. But my instincts are that it will certainly be less, the Bay will certainly be one of the first regions of the country to feel the effects of the rate hike. It’s still absolutely incredible to see prices increase by 15 to 20% in a real estate market in such a short period of time. I never thought I would see this. »

The high-end market in this region has not been affected by the crisis either. “It shows that there is a solid base of buyers who have no problem buying a home and who can actually pay more,” Tucker said.

The kingdom of home staging

Polished photos, trendy furniture and plants, garden chairs that invite you to relax. In California, real estate agents don’t bother marketing the properties they are entrusted with. Unless you have an immaculately maintained home decorated with works of art (which is not impossible here), properties will be renovated and a home staging before they are offered for sale. In this way we maximize a property’s potential, make it easier for future buyers to project themselves there and then avoid the downward negotiations that may occur. So goodbye to IKEA furniture damaged by years of service, wedding photos and other children’s drawings. This service, often a must-have for agents, costs the seller tens of thousands of dollars. Interestingly, sellers leave their homes several weeks before the sale, and takeovers here are very quick and inflexible.

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