The number of luxury sales in California’s Bay Area grew 6% between September and November compared to a year ago. But results varied widely by county, giving mixed signals about the overall state of the Bay Area’s luxury market, according to a report Thursday from Compass.
The mixed appreciation in home sales comes as luxury buyers are concerned with stock market volatility “since the affluent are most attentive to financial news,” and due to disincentives on owning additional homes as a result of last year’s tax changes, said Patrick Carlisle, chief market analyst at Compass.
“The Bay Area’s its own little world. It’s the No. 1 destination for venture capital investment in the world,” Mr. Carlisle said. “Tech has come down really dramatically” in the stock market recently, prompting some to think twice about where they’re buying in the area, he said.
The counties bordering tech hub Silicon Valley were emblematic of those mixed results. Santa Clara County, once the hottest in the region, saw 14% fewer luxury home sales than last year, even though it still had more homes priced above $2 million than elsewhere in the region. Meanwhile, San Mateo County saw a 17% year-over-year increase in home sales. The report looked at data on the luxury market at the county level, and those counties include cities such as San Jose, Palo Alto, and Mountain View.
“If stock market volatility continues, especially if it includes sudden, dramatic declines, … I would expect the luxury home market to soften until there is more clarity as to where financial markets are heading,” Mr. Carlisle said.
“A surge in local high-tech IPO activity in early 2019 could have a significant positive effect on the market, as it creates incredible amounts of new wealth,” he continued. “Many big Bay Area IPOs are now planned or being considered, but if confidence in the stock market plunges, that could change.”
The report also showed that luxury house sales in San Francisco grew by 16%, but the number of condo sales remained flat. It also showed luxury condos were valued higher than houses in San Francisco; condos had an average value of $1,391 per square foot, while houses had average values of $1,266 square feet.
Original article: https://www.mansionglobal.com/articles/mixed-signals-for-the-luxury-real-estate-market-in-california-s-bay-area-116439
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