House Prices Plunge to Levels Not Seen for 10 Years

The median price of condos in downtown San Francisco, one of the most overvalued cities in America during the pandemic boom, has now plunged to the same levels they were a decade ago, according to recent data.

A chart updated to November 2023 and released by Compass, a website which provides real estate market data and insights, found that the price of condos in downtown San Francisco are now the same as they were in January 2014—just about over the $800,000 mark.

In the rest of San Francisco, condos tend to be much more expensive, for a median sale price of more than $1,200,000, as shown in a graph shared by the company in its report. The graph was also shared on X, formerly known as Twitter, by vacation rental investor Rohin Dhar.

This significant gap between condos in downtown San Francisco and anywhere else in the city is due to the way that downtown has been negatively affected by recent trends, like the exodus of major retailers and the spread of remote working during the pandemic.

"The greater downtown/SoMa/Civic-Center condo market has been much more negatively affected by a number of economic, demographic and social factors impacting supply and demand than condo markets in other city districts," Compass wrote in its report.

As mentioned by the company, downtown San Francisco is the heart of large projects, new condo constructions, office buildings, and high-tech employment. But many of these office buildings have remained largely empty in the aftermath of the pandemic, as tech workers no longer felt the need to be physically in the office—or live close to their workplace.

For this and other reasons, including the impossible peaks reached by home prices in the city during the pandemic years, San Francisco was hit particularly hard by the housing market correction which affected the entire country.

With higher interest and mortgage rates last year following the Federal Reserve's attempt to tame inflation, new listings and sales in the city dropped. Sales in the city in 2023 were down by approximately 28 percent year-to-date compared to 2022, according to Compass.

On an overall level, the three-month rolling median price of condos in the city was down by almost 8 percent in October 2023 on a year on year basis, according to Compass. The price of single family homes also dropped by 1.5 percent in the same period.

It's unclear how long the housing price correction will last in San Francisco, and what will happen in the coming year. Institutions like Fannie Mae expect home sales to bottom out in early 2024, followed by a slow rebound. While mortgage rates are predicted to decline modestly in 2024, the path to recovery is expected to be gradual.