As the San Francisco housing market continues to struggle, homeowners are feeling the impact, taking heavy losses when it comes to home values.
According to an analysis from real estate brokerage Redfin, San Francisco has the highest rate of homes selling for less than their purchase price among the 50 largest U.S. metro markets, with 12.3% of homes sold taking a loss, up from 5% a year earlier. That number quadruples the national rate of 3%.
“Some condos in the Bay Area are now worth less than their owners bought them for in 2018 and 2019, in part because commuting from Oakland and other outlying areas into downtown San Francisco isn’t really a thing anymore,” said Redfin Agent Andrea Chopp.
“The Bay Area housing market was unsustainable before, so this correction is probably healthy, but the unfortunate thing is prices remain unaffordable for a lot of people — especially with rates now above 7%.”
San Francisco’s median home sale price fell a record 13.3% year-over-year in April, more than triple the nationwide drop of 4.2%. It has since recovered slightly, being down 4.3% year-over-year to $1.4 million in July, but the overall value of homes in San Francisco have fallen by about $60 billion since last summer.
This is largely due to the Bay Area’s top-tier real estate prices and the thousands of layoffs the tech sector experienced last year. In addition, remote work has allowed employees to move to more affordable housing markets, leading to more competition and less demand for pricey San Francisco homes.
For those who are selling in San Francisco, the median loss they’re taking is over $100,000 in most cases. Homeowners were less likely to take a loss in metros such as San Diego, Boston, Providence, Kansas City, and Fort Lauderdale, Florida where the rate of homes sold for less than the purchase price was around 1% or less.
Despite the housing market slowdown, Redfin reports that purchases of San Francisco homes are still relatively active, as buyers are taking advantage of the market’s more realistic pricing.
Overall, the correction in home prices is likely healthy for the unsustainable housing market in San Francisco, but it’s unfortunate that prices may remain unaffordable for many buyers. Unfortunately, this may mean we’ll continue to see people selling at a loss in the Bay Area for the foreseeable future.
