San Francisco Condo Market Rebounds with Median Prices at $1.15M

Key Takeaway

• San Francisco's condo market is rebounding, with median prices at $1.15 million and pending resales near the 10-year average.
• District 9 saw a 20% increase in sales despite a 4% drop in price per square foot, indicating strong demand.
• New construction supply is down over 16%, with only 89 new units completed in 2023, the lowest since 2011.

San Francisco Condo Market Nears Stability

The San Francisco condo market is showing signs of stabilization after years of price declines and low trade volumes. According to a recent Polaris report, the market is almost back to its 10-year average in terms of new construction escrows, resales, and prices. The median price for an existing condominium in San Francisco for the three months ending March 31 was $1.15 million, slightly up from the previous year and just under the 10-year average of $1.17 million. Pending condo resales stood at 229, close to the decade average of 234, while new construction units in escrow were just two less than the 10-year average.

Market Dynamics and Price Trends

The price per square foot in District 9, which includes neighborhoods like SoMa, South Beach, Rincon Hill, and Mission Bay, is still down about 4 percent. However, the number of sales in this district has increased by 20 percent compared to the previous year. Compass data reveals that Downtown units have a median price of just under $1 million, while units outside Downtown are about $300,000 higher. Notably, condos in upscale neighborhoods like Presidio Heights, the Marina, and Cow Hollow command over $1,200 per square foot, compared to $1,000 in Mission Bay and $780 in SoMa.

Supply Constraints and New Developments

Resale inventory has seen a slight uptick, but new construction supply is down more than 16 percent from last year. Only 89 new condo units were completed in 2023, the lowest since 2011. Currently, just under 240 units are under construction in District 9, despite nearly 3,300 units being approved. Notable projects include Prado Group’s 2238 Market Street, which has sold all 42 units, and Avery Bays-developed Fulton 555 Street in Hayes Valley, which has sold 124 of its 139 units. Maison Pacific in Nob Hill and Serif in Mid-Market are also showing strong sales momentum.

Legal and Zoning Challenges in New Projects

In a significant development, CH Planning has abandoned its controversial 50-story condominium tower project in San Francisco’s Outer Sunset. The site has been sold to Pacific Housing West, which plans to build an eight-story, 100-percent affordable condominium building. The original project faced years of legal battles and community opposition, primarily due to zoning rule interpretations around "bulk code." The new affordable housing project aligns with San Francisco's goal to upzone commercial corridors for 34,000 new housing units by 2031.

Broader Implications for San Francisco's Housing Market

The shift from high-rise luxury condominiums to affordable housing projects reflects broader trends in San Francisco's housing market. The city is under pressure to meet its state-mandated housing element, which requires planning for 82,000 homes by 2031. The new affordable housing project in Outer Sunset is a step towards addressing the city's housing affordability crisis. Planning Director Rich Hillis welcomed the new proposal, stating that the site could accommodate hundreds of new housing units in an area that has seen little development.

My Perspective on Market Dynamics

The stabilization of the San Francisco condo market and the shift towards affordable housing projects highlight the complexities and challenges developers face. While the move towards affordable housing is a positive step in addressing the city's housing crisis, it also underscores the need for robust policies and community engagement. The emphasis on affordable housing is essential for a balanced and sustainable market recovery, but it must be supported by effective legal frameworks and zoning regulations to ensure long-term success.