This $20M S.F. luxury home faced ‘very unusual’ drop in price. What happened?

A five-bedroom, 10,000-square-foot home in Russian Hill, just a block up from San Francisco’s famous crooked stretch of Lombard Street, was listed for $20 million just over a year ago — the same price the owner paid for it in January 2020. But last month it sold for half that: just under $10 million.

The 50% price drop for the home at 2626 Larkin St. was “very unusual,” according to Patrick Carlisle, chief market analyst for the Bay Area real estate group Compass.

Though the Russian Hill home is an extreme example, Carlisle noted that homes in the highest price range tend to see larger drops from the original list price than the general market, as there are fewer buyers at the very top of the market and such homes can be difficult to price. He added that the luxury home market in San Francisco has been affected by the “drumbeat of negative news” about the city’s economic and social struggles and the “absurdly overdone speculation about the city being in a ‘doom loop.’ ”

Data shows that the higher a home is priced, the more likely it is to sell under the asking price. So far in 2023, homes in San Francisco in the $7.5 million-and-above range are selling for around 90% of the asking price — slightly lower than in 2021 and 2022, but far above the 50% cut seen in the sale of the Larkin Street home.

And Carlisle said that economic indicators for the city have recently turned more positive, which could mean a stronger market in 2024.

The real estate agent who sold the property, Nina Hatvany, said she could not comment on this sale specifically, as she signed a nondisclosure agreement. Public records show that the home’s deed was transferred to a limited liability company that was created days before the sale. That LLC is registered to a corporation in Glendale that files business information with the state on behalf of other businesses, a tactic people use to protect their privacy.

Last year, in a feature story about the home, Hatvany told the Real Deal that the owners — Leslie Stretch, the former CEO of software company Medallia, and his wife, Heather — were selling because the youngest of their four children had left for college and they wanted to downsize to a pied-a-terre in the city. She added that the family had also bought “several ‘spectacular’ ” second homes during the pandemic. 

Stretch retired from the CEO position in March of this year after 4½ years in the role, and transitioned to an “advisory role” with the company, according to a news release.

Hatvany also said that the couple had spent hundreds of thousands of dollars upgrading the smart-home features of the house and added two car lifts to make room for five cars in the three-car garage.

At the time, she also told the Real Deal that her team had other homes on the market in the $18 million to $25 million range, “and not one of them is as done as this house is.” 

In an email to the Chronicle, Hatvany said her team was finding that “some sellers are more willing to take offers below their asking price,” and that the data is showing that “there has been a downward adjustment in values, even for single family homes in the most desirable neighborhoods.”

In general, home sales above $5 million in San Francisco tend to spike in the spring and slump during midwinter, according to Compass’ December market report. Hatvany said that price per square foot also rises in the spring, flattens in the summer and declines slightly toward the end of the year.

The data indicates that the end of the year “brings out buyers seeking a ‘deal’ and sellers willing to participate,” she said.

Reach Danielle Echeverria: danielle.echeverria@sfchronicle.com; Twitter: @DanielleEchev