There’s a ‘mansion shortage’ in Pacific Heights

MUST LIKE FOG | CLAUDINE ZAP

The frenzy for multi-million-dollar listings in San Francisco has caused feverish bidding wars. In June, 44 homes sold for $1 million or more over the asking price. While that’s a small slice of the overall market, my colleague Erik Gunther notes that it shows “there’s a small, concentrated group of buyers willing to pay whatever it takes to win a house in this city.”

In San Francisco, the median home price hit a record high at $2.2 million in May, and dropped to about $2.1 million in June — still almost 25 percent higher than a year ago. With just 590 single family homes and condos listed for sale in the city at the end of June, a Compass report notes that “demand for larger, high-end homes continues to outpace available supply, contributing to what could be described as a ‘mansion shortage.’ ”

I wanted to dig into the so-called “mansion shortage” and asked Compass luxury residential agent Ronda Priestner to walk us through the unique state of the market.

Priestner is well-equipped to discuss the topic: She currently has a Pacific Heights listing for $65 million that is quietly being shopped around. The two-parcel property spans the block from Broadway to Pacific on Billionaire’s Row. The owners, philanthropist Nicola Miner, daughter of Oracle founder Robert Miner, and her husband, writer and filmmaker Robert Mailer Anderson, purchased the property for $5 million in 1999. They tapped architect Marc LaRoche to design a compound that was completed in 2002.

So who better to speak to the issue of so-called mansion shortage than the agent representing a rare $65 million home? This interview has been lightly edited for length and clarity.

Is there a mansion shortage? And what exactly is a mansion? 

There is really a shortage of irreplaceable homes. There are plenty of luxury properties but there are few that check the historic pedigree, iconic views, architectural significance and a premium Gold Coast address on a tony stretch of Broadway. 

When you look at the bigger picture, you can create a luxury home almost anywhere, but very few or none are going to be created on the Gold Coast. Broadway is one of the few streets in America where scarcity is permanent. But you’re also seeing this time in San Francisco when there’s this extraordinary wealth being created in the Bay Area once again, and demand increase for an asset that is essentially one-of-a-kind, turnkey, and they’re not there. And many sellers of these beautiful homes, they’re comfortable and they’re sitting on a very low tax base. And you have a low tax base on a one-of-a-kind home. And there’s no motivation financially to sell. So these homes come up once in a generation, or every few decades. 

What neighborhoods are most in demand right now for these kinds of homes?

I’m talking primarily about the Gold Coast, but also Pacific Heights, Presidio Heights, Cow Hollow and also Noe Valley. Anywhere on the north side and Noe Valley are where I’d say the concentrated or strongest buyer demand remains. Those are the coveted neighborhoods that we’re seeing the mansion shortages. Some people might refer to it as a trophy asset shortage as well.

What has been your experience? Are people willing to pay as much as possible? There is the stat that 44 homes this spring sold for a million or more over ask. 

Overbidding is at historic or at least record level highs. 

What is your advice to buyers who are in this uncharted terrain?

Number one, buyers need to have a savvy agent. They need help and guidance through the market. And also, some agents are taking clients outside of SF and going to Marin. A buyer’s got to be willing to be flexible. It all comes down to location, location, location. You can do so much with the home, but you can’t change the location. And listen to your agent! That would be my advice. 

What does this frenzy of buying at the top say to you? 

I think when the wealthiest people in the world can choose to live anywhere but are choosing San Francisco, that’s a big signal. The AI renaissance that we’re in is just the beginning of a Gilded Age, so to speak. 

There’s talk of FOMO — fear of missing out — a fear that once the AI companies go public, there will be a major land grab, and buyers may feel pressured to rush to buy something now or be left out. What would you tell buyers?

I have to guide every client in accordance to their own life and lifestyle. I would never push the client to make a decision because of the market. But I would have to say, when exceptional properties become available, my clients won’t ask if there’s another one coming next month, because there isn’t. If you find a home that you want, you have to ask yourself, how much are you willing to lose it for. The overbidding is at a record high. It’s not easy but it’s not impossible. You just have to have a great agent.

Speaking of one-of-a-kind homes, you have a private listing at 2835 Broadway for $65 million. What led you to keep it off the multiple listing service? 

This type of home is well known, it’s iconic. I’m not saying it’s never going to the MLS. At the moment, it’s not. We’re generating enough information to the right people, the right brokers. Our buyers aren’t looking on the MLS for homes like this. Our buyers are talking to the top agents and brokerages and looking at the Robb Report and The Wall Street Journal and other publications.

So the strategy is a more targeted play? Who is the ideal buyer?

There’s no one profile of the buyer. It could be an individual in an AI environment who wants a live-work compound. It could be a family that wants a private estate compound with walkability to some of the city’s best schools. But the demographics that we’re generally aiming this at are those who are in the know, or have agents who know how to find properties like this.

Does that mean you have interest?

Yes, I’m speaking with potential buyers now and have show dates.

Veteran real estate journalist Claudine Zap writes Must Like Fog on Substack, which offers weekly local news and happenings from a real estate-obsessed writer. Follow or subscribe at mustlikefog.substack.com.