Luxury condo prices in San Francisco are nosediving amid the continued rampant drug use and crime issues in the city, which is compounded by people continuing to work remotely.
“I knew that market segment had weakened, but I didn’t realize the degree to which things had changed,” Patrick Carlisle, the chief market analyst for Compass, which conducted the study, said according to the New York Post. “It was a bit shocking.”
The Compass report found that the median sales price of a two-bedroom condo in the downtown area has fallen by 16.5% since 2021, the New York Post reported. There has been a 7% drop in similar dwellings in areas outside the downtown neighborhoods.
The number of condos available downtown is also twice as high as in the rest of the city, SFGate reported this week.
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“The downtown market has been hit much, much harder than the luxury condo market in these older neighborhoods,” Carlisle said. “I’m not saying there haven’t been effects in places like Russian Hill and Nob Hill and Pacific Heights, because there have been. The market has softened there also, quite significantly, but not to the degree that the downtown market has.”
The condo median sales price dropped from $1.47 million last December to $1.23 million now in the greater downtown and South of Market district, according to the New York Post.
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“Of course, there are people who see this as an opportunity to get a good deal,” Carlisle told SF Gate. “There are condos selling in the newer luxury developments in the South Beach and Yerba Buena areas at large discounts from what people paid for them three, four years back. You know, we’re talking gorgeous units with spectacular views in ultra-luxury buildings.”
Compass’ report cites “a triple whammy of economic, demographic and quality-of-life issues” as the issues.
“San Francisco went from probably being the hottest office market in the country to being about the weakest,” Carlisle told SF Gate. “High-tech workers were the ones who were most likely to say, ‘Well, I can work from any place. I’ll move someplace where housing costs 90% less.’”
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He added that homelessness and crime in the downtown areas have affected “quality-of-life ambiance.”
Rampant drug use in the city’s Tenderloin district, located in the downtown area, pushed Mayor London Breed to declare a state of emergency last year, for example.
“We are losing over two people a day to drug overdoses, mostly to fentanyl, and mostly in the Tenderloin and SoMa. This is a public health emergency demanding a crisis-level response, with massive urgency, coordination and determination to confront this epidemic,” city supervisor Matt Haney said at the time.
San Francisco residents reported arming themselves with bats and other protective weapons earlier this year after a drug sobering center opened in the city, which is intended to help end the rampant drug use.
“More troublemakers settling in, feeling comfortable doing their drugs, pissing and s—ting in the street blocking the sidewalks,” a man who only identified himself by his first name, Ghis, told ABC7 in October. He called what he is currently seeing “a period of insanity.”
The city had an office occupancy rate of 39% as of late September, the New York Post reported, lower than both New York City and Los Angeles. Residents of the Golden City have cited homelessness and crime as their top concerns that need to be addressed, according to local polls.
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