Welcome to today’s news update, North Florida. I’m Jane Sheppard, bringing you an interesting story from the West Coast housing market that has implications for us here.
San Francisco Housing Market Takes a Hit
As it turns out, the housing market in San Francisco is experiencing a downturn. Almost 20% of the homes sold in the city over the past three months sold at a loss, says Redfin, a national real estate brokerage.
While this may appear better than the 11-year high seen just three months prior, San Francisco still holds the dubious distinction of having the highest percentage of homes sold for less than their purchase price. This figure is four times the national average.
Significant Monetary Loss for Sellers
Homeowners who had to sell at a loss didn’t part ways with their homes lightly. According to Redfin’s data journalist and senior economist, the typical homeowner who sold at a loss in San Francisco did so for $155,500 less than their purchase price. The median loss nationwide? A significantly lower $39,912.
This might seem surprising, given that home prices are near all-time highs. However, San Francisco’s case is a little different. The city’s median home sale price peaked in April 2022 amid the pandemic-fueled housing boom. Since then, it’s plummeted by 15% or $250,000. Zillow reports that the city’s average home value is down almost 4% in the past year.
Multiple Factors at Play
But what’s causing this downturn in San Francisco’s housing market? It’s not just the loss of historically low mortgage rates, although those did hit 7.29% today. The city has been caught in what many have termed an ‘urban doom loop,’ with significant changes to the city’s downtown post-pandemic.
- Capital Economics considers San Francisco one of the “worst-hit metros” regarding falling office values. If their predictions hold, office values in the city could decrease by a whopping 60%.
- The city’s high reliance on tech, exorbitant rent levels, pricey housing, and growing crime and homelessness problems downtown all contribute to the woes of San Francisco’s office owners.
- Many tech employers and big-name retailers have relocated out of the city, leading to a decrease in its appeal.
Signs of Recovery
However, not all is doom and gloom. The city is showing signs of recovery, with homes selling at less of a loss. The hype surrounding artificial intelligence has led startups like OpenAI and Anthropic to take up more physical office space, sparking hope for the office sector.
The Silver Lining for Home Buyers
And let’s not forget, falling home prices are a boon for potential home buyers in an already insanely pricey city. Not all sellers are losing money either. In fact, the typical San Francisco seller made $482,000 more than what they purchased their home for during the same three-month period, according to Redfin.
That’s all for today’s report, North Florida. Stay tuned for more updates. This is Jane Sheppard, signing off.
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