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January 4, 2024

2023 SF Real Estate Wrapped

Market Street Aerial View

2023 won’t go down in history as a banner year for San Francisco real estate. High interest rates and a challenging insurance industry caused their share of headaches. But single-family homes sellers benefitted from low inventory and many condo buyers were able to get good deals.

Here are the factors that shaped the market last year:

Interest rates remained high. The Fed raised rates seven times in 2022, and again in March, May and June 2023. Rates settled down into the six percent range in the first half of this year, and then reversed course in July. However, the 30-year fixed rate peaked above eight percent in October before drifting down to around 7.25% in mid December.

House inventory was low, leading to buyer competition. Those homeowners who ventured forth to sell—particularly in price ranges up to $3M—often ended up setting offer dates and receiving multiple offers. Prices may not have been as sky high as in the past, but buyers were definitely overbidding in order to snag a home.

There was an oversupply of condos. Contrary to the house market, there were many more condos for sale than there were actually going into contract or closing. Buyers ended up getting good deals, especially for units in large buildings in neighborhoods like South Beach, Mission Bay and Yerba Buena.

Anything to do with home insurance was a headache. The number of insurers willing to cover California properties dwindled, and it seemed like insurance companies were objecting to more things than ever—age of a building, outdated electrical, old roofs.

The Millennium Tower reconstruction ended. The tilting and leaning drama finally faded at the Millennium in downtown San Francisco. All 18 of the concrete piles meant to stabilize the building were driven 275 feet below the surface into bedrock as construction was completed. Engineers expect that the foundation work will head off further instability, and it’s likely that homeowners will be in a better position moving forward if they want to sell.

Lithium battery fires heated up. There were more than 20 fires in the city this year that were caused by lithium-ion batteries. Typically started by e-bikes and scooters that were overcharged where they were stored in homes or garages, the fires are extremely difficult to extinguish and can spread rapidly.

Cash sales were on the upswing. A quarter of house and condo sales were paid for by buyers in cash in 2023, behavior likely due to the higher interest rates.

Homeowners association dues (HOAs) were at all-time highs. Condo buyers had to navigate the highest HOA dues in the past 20 years as HOAs were forced to raise dues to keep pace with increased operating costs and building insurance. This made it that much harder for buyers to qualify for condo purchases.

Celebrity real estate activity hit San Francisco. Julia Roberts sold her house in Presidio Heights, and Ansel Adams’ childhood home in Sea Cliff also changed hands. The Marina house at 3159 Baker that hosted season one of Top Chef was listed in January 2023 and closed later in the year after two price reductions. And finally, the Robin Williams estate in Sea Cliff was listed for $25M in the fall and remains on the market as of this writing.




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