Nina Hatvany has worked for 25 years in San Francisco as a real estate agent concentrating on the high end of the market. Today, as a result of a reeling stock market and concerns about global economic stability and growth, the conversation with well-heeled clients has turned decidedly more cautious.
"I have a number of buyers who are just more hesitant," Hatvany told CNBC. "They look and they talk and then they start arguing with me about the slow IPO market and overvalued unicorns. I feel like I have to argue with them about how nice the house is."
As technology stocks slide — the Nasdaq is down 15 percent this year — and private tech valuations suffer, real estate brokers say the feverish clamor for high-end homes in San Francisco has quieted.
"Somebody who might have pulled the trigger at $5 million last year now might be a bit more cautious," said Josh McAdam, a top producing real estate agent with Pacific Union in San Francisco. "It's not the same environment."
McAdam is quick to note that demand remains strong for homes selling in the $1 million range. But the high-end residences in the City by the Bay, if they are to attract buyers, now need to boast all the right finishes, he says.
For example, McAdam said only one home in the tony neighborhood of Noe Valley last year sold for over $5 million. The year before, he says a handful of homes sold in that price range and a couple even above $5 million.
Hatvany confirms the same trends. In the second quarter of last year, her firm said, 18 homes sold in San Francisco for $6 million or higher. That number dropped to nine in the fourth quarter.
One question: Will the more cautious tone now defining the ultra-high-end of the market spread to other price points?
Christopher Palmer — an associate professor at the Haas School of Business at the University of California, Berkeley, who specializes in the housing markets — said the biggest threat to price appreciation is a downturn in tech because so much of the Bay Area economy is reliant on the sector.
"Tech stocks have taken a beating in the past few months, and every time there is a stock market correction, people start to wonder if the spigot of capital that has fueled so much Bay Area growth is about to be turned off," Palmer said.
Analysts at Fitch raise another concern, arguing that home prices in San Francisco have "risen to a level unsupportable by area income." Fitch reports that home prices set a record last year and are now more than 60 percent above the post-crisis low of 2012.
Fitch estimates that the city's current home prices are 16 percent overvalued relative to economic fundamentals.
Still, though home prices may fall in San Francisco, Palmer said a wave of mortgage defaults or foreclosures is extremely unlikely.
He notes that the average jumbo mortgage borrower in San Francisco had a nearly 40 percent down payment, implying that homeowners enjoy a lot of flexibility to navigate price declines before being underwater.
Palmer also highlights a benefit of decreasing home prices: "To many prospective homebuyers in the Bay Area, this is great news," he said. "There is a substantial amount of young families that would appreciate a slowdown in appreciation to be able to get into a home."