House Prices Are Plummeting in San Francisco

The city of San Francisco continues to report some of the biggest price drops in the entire country, with condos downtown being sold for thousands of dollars less than they were purchased years ago, according to Zillow adverts.

The average San Francisco home value was $1,216,087 as of December 31, down 5.6 percent from a year before, according to data from Zillow. Redfin writes that the median sale price of a home in the city dropped even lower, down 7.6 percent from a year before. The median sale price per square foot in San Francisco is $874, down 3.8 percent compared to a year before, according to the company.

Home prices in the city have been plummeting since reaching a peak of $1,449,470 in May 2022, with the exception of September 2023, when they saw a modest month-on-month increase from $1,226,112 to $1,228,976, according to Zillow. Since then, they have continued falling consistently until the end of December, the latest data available.

While home prices dipped only modestly between late summer 2022 and spring 2023 during what experts called a "correction" of the housing market, San Francisco experienced some of the most dramatic price drops in the country.

San Francisco experienced a 1.3 percent drop in prices between October and November 2023—the largest monthly decline in the country, according to the latest S&P CoreLogic Case-Shiller national home price index released on Tuesday.

That's because, after being one of the most overvalued markets and most expensive urban areas in the country for decades, the city was hit harder by the affordability crisis caused by high mortgage rates, low supply, high demand and skyrocketing prices. The pandemic—with the rise of remote work—also profoundly impacted the city, with many tech and start-up workers leaving San Francisco for cheaper cities nearby.

"San Francisco's housing market is suffering from high mortgage rates like every other market, but it is especially vulnerable because prices were already really high there and it is the center of the tech world," Redfin's Head of Economic Research, Chen Zhao, told Newsweek.

"With layoffs and the effects of remote work especially acute in tech, San Francisco saw one of the largest corrections in house prices once the Fed started hiking interest rates," she said.

"Things are stabilized and recovered somewhat but not completely. With mortgage rates expected to decline slightly, but remain high, prices are unlikely to recover much more unless remote work patterns really change or San Francisco's reputation in the press changes dramatically."

Vacation rental investor Rohin Dhar has been keeping track of what he described as "aggressive price cuts" in San Francisco, sharing the advert pages of homes for sales on Zillow on X, formerly known as Twitter. In one such advert, a 2,012 sq ft home with four bedrooms and three bathrooms is now being sold for $1,095,000 after a price cut of $704,000 from when it was listed for sale on January 19.

The last time the house was sold, according to Zillow, in late March 2004, it was priced at $600,000.

Another advert shared by Dhar shows a condo in the Civic Center neighborhood in downtown San Francisco which was sold for $485,000 on January 30 after being purchased for $675,000 in 2018. The condo is a total of 724 sq ft and includes one bedroom and one bath.

Newsweek contacted Dhar for comment by direct message on X and emailed Zillow and Redfin for comment on Wednesday.

Despite the price drops suffered by sellers, the San Francisco market remains competitive, according to Redfin, which reports that homes in the city receive four offers on average and sell in around 51 days—less than the 54 days averaged last year.

Are you a San Francisco resident witnessing the drop in home prices in the city? Let us know your experience by contacting g.carbonaro@newsweek.com

Update 2/6/24, 7:00 a.m. ET: This article was updated to include a comment from Redfin's Chen Zhao.