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How high will the market go?

The top end of the San Francisco luxury real estate market is at a new high. The last “peak” was in 2007 and that is in the rear view mirror. When looking at Q2 sales data, a total 291 luxury properties sold in the second quarter of this year, more than twice the number (142) sold in the second quarter of ’07 (the previous peak of the luxury market). “Luxury” can be defined as single-family homes selling for $2M+ and condos that go for $1.5M+.
For last year as a whole, there were 741 luxury sales, up 75 percent from 425 in all of 2007. Sales of all homes and condos in the city rose only 9.8 percent over the same period.
What does it mean? Since the luxury sector has outpaced the other market sectors, I’d say (a) some of the increase in luxury sales is a result of price appreciation, which pushes more homes into the luxury category, (b) San Francisco has a lot of “rich’ residents and (c) the rich are getting richer and (d) San Francisco luxury real estate is a great investment!

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