Update 11 April 2024: The list price of 2800 Pacific Avenue has been reduced to $12,740,000.
 
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This year is already shaping up to be one for the books, an inflection point for local real estate amidst growing confidence that the worst is over. Venture capital is flowing into the city, investors are betting big on revitalization, and the forthcoming election could well bring new leadership to city hall. Meanwhile, last month, the Median Sales Price of all homes posted a year-over-year gain for the first time since mid-2022; Single-Family and Condo/TIC/Coop prices, separately, are up from a year ago.

Change is in the air. And with change comes opportunity.

For luxury home buyers, this moment is turning up multi-million dollar discounts. Take, for instance, the pre-war duplex penthouse in Pacific Heights which was originally listed at $25,000,000 and sold for $16,000,000; or the oceanfront manse in Sea Cliff originally asking $19,000,000 and sold for $14,500,000. The ten priciest deals closed in 2024 so far have, on average, settled up at just 92.0% of their final advertised price. Compare that to an average 101.45% for all others (almost entirely under $5 million).

Since we featured Herbst Manor in September 2023, its ask has dropped from $15,500,000 to $14,995,000, then to $13,995,000, and to $12,990,000 now. And there’s a good chance that a buyer will get it for even closer to its 2014 purchase price — still millions less.

It’s important to make the distinction between price reductions and declining prices. On that note, evidencing a market on the mend, the number of $5+ million home sales reported to SFAR MLS this January-February is double what it was one year ago.

Buyers, not sellers, decide what a home is worth. With consideration to the rarest properties, there often are inadequate comparables available for a seller to base a list price. An exceedingly limited number of qualified buyers, furthermore, means sellers cannot count on competitive offers to arrive at market value. And, so, moonshot pricing is both common and subject to reduction according to market dynamics — without necessarily dipping into the red.

Case in point, the $16,000,000 purchase price of the aforementioned of pre-war duplex penthouse is in fact exactly what the seller had paid apples-to-apples. And the oceanfront manse fetched a full $6,000,000 more than its previous purchase (pre-renovation). Those properties today rank among the highest-priced of all time in their respective neighborhoods.

Legendary Chronicle columnist Herb Caen, Mr. San Francisco himself, once declared Herbst Manor the city’s most iconic mansion. In its 125-year history, this classical Georgian masterpiece has been home to heads of industry, patrons of the arts, and storied fixtures on the social scene. The 2013 San Francisco Decorator Showcase breathed new life into all 8,100+ square feet of it, since evolved into a resplendent family residence. Indeed, few properties compare in prominence, grandeur, and style.

The opportunity to purchase this local treasure may well be a once-in-a-lifetime event. No less extraordinary is the chance to get it at a price that would have been grossly below market value just a few years ago. Run, don’t walk.