S.F. condo values set for rebound

San Francisco condominium values are still far below pre-pandemic levels, many large buildings remain half-vacant, and the prospective buyers who might fill them have yet to return. But real estate agents say that’s starting to change.

“The market has already hit bottom,” said Mike Basham, founder of San Francisco real estate firm Vulcca. “It probably hit bottom a year ago.”

Few segments of the Bay Area’s housing market were hit as hard during the pandemic as San Francisco condos. From February 2020 to February 2024, the city’s single-family home values declined on average from $1.44 million to $1.36 million, about 5.5%, according to data from real estate brokerage site Zillow.

But over the same four years, San Francisco’s condo values dropped by more than twice that rate, 12.8%, from $1.14 million to $997,000.

That was the secondbiggest value drop among any city in the San Francisco and San Jose metropolitan areas. Only East Palo Alto had a larger decrease — about 16.6%, from $822,000 to $686,000.

Meanwhile, condo values in suburban cities including Livermore, San Ramon and Dublin have increased rapidly since the pandemic began. In Livermore, values rose 36.7% from $572,000 to $781,000.

The condo trends largely followed the overall movements across the Bay Area’s housing market. Buyers, especially those able to work remotely, have shown less interest in urban cores such as San Francisco in favor of cities where they can get more square footage for their money.

But Chris Lim, a luxury property specialist with Christie’s International Real Estate, said a surge of sales is coming. Workers at upcoming tech arrivals such as OpenAI are already touring downtown San Francisco condos, he added, preparing for their companies’ hybrid work policies by taking advantage of the dropped prices.

“There’s incredible value going on right now, and I think the educated buyer recognizes that now is an opportunity to purchase,” Lim said.

Patrick Carlisle, chief market analyst at Compass, said he believes San Francisco condos will experience a “significant rebound” this year, pointing to Compass data that shows the median price for a San Francisco condo from December 2023 to February 2024 rose by about 5.6% from the same period in 2022-23.

Carlisle said San Francisco’s downtown condos — many of which have remained vacant for months — could start filling, too. Condos in the area generally sell for $200,000 to $300,000 less than in the rest of the city, according to Compass data, despite generally being bigger and newer.

Some of that difference has to do with the downtown area’s economic and social challenges, real estate agents said. And downtown condos can have homeowners association fees in the thousands of dollars, warding off potential buyers sensitive to monthly costs.

But downtown condo prices have been creeping upward since the beginning of the year, though they haven’t grown as much as in the rest of the city, said Krysen Heathwood, a senior managing director with Compass’ marketing unit.

It’s uncertain how much San Francisco’s condo prices could rise this year, if the recent increase holds. Carlisle said it’s unlikely they’ll reach the same levels they did in 2022, when low mortgage rates sparked a market boom. But Basham said he wouldn’t be surprised to see condo prices hit record heights.

“I think buyers are realizing … that if they don’t buy now, they’re going to be paying more for the same thing in a month,” he said.

Some buyers could continue to focus their search away from San Francisco, where square footage comes at a premium. Danny Kang, a Pleasantonbased real estate agent with Coldwell Banker, said the Dublin condo market has taken off, with many of his clients pursuing the city’s relative affordability.

Most home shoppers still prefer houses, Kang said. But the Bay Area’s notoriously tight inventory has pushed some buyers — particularly first-timers — to consider condos instead.

“San Francisco always figures itself out,” Lim said.