San Francisco Housing Prices Return to Pre-Pandemic Levels

It looks like housing prices in San Francisco are back to “normal.”

After years of rising prices in the wake of the COVID pandemic, housing costs in the city have returned to July 2018 levels, SF Gate reported, citing a new report from Redfin. That was the last time the city’s real estate market could be defined as “normal,” according to SF Gate.

Redfin used a mortgage payment-to-income ratio to make its calculation. By that metric, homes cost about as much as they did before the pandemic, relative to how much money people make.

In San Francisco, the median home price has risen 8 percent since July 2018. By contrast, the national median price surged 56 percent over the same time period. At the same time, annual household incomes have grown 7.7 percent in San Francisco, nearly double the 3.9 percent yearly increase across the country.

“All of a sudden, you find yourself back to normal, and there’s not this big adjustment that happened,” Chen Zhao, head of economics research at Redfin, told SF Gate, noting that there hasn’t been a “cataclysmic event” like a housing crash or a large decline in mortgage rates that would typically reduce housing costs.

Oakland is on track to return to “normal” housing prices this month if prices remain stable or decline. It’s a promising sign considering no other metro area in the U.S. is expected to reach “normal” levels until Austin is predicted to in March 2027.

With the same calculation at a mortgage rate of 6.7 percent, Sacramento will return to “normal” in November 2028, San Diego in February 2029 and San Jose in May 2029. Redfin’s projections don’t factor in property taxes or insurance costs, which weigh more heavily on California homeowners.

Anaheim metro residents are seemingly out of luck, as prices will never return to normal there, according to Redfin’s calculations. This is due to prices increasing so much that it would be virtually impossible to return to pre-pandemic levels, even over the next decade.

Multifamily vacancy in the Bay Area dropped to 5.3 percent in the first quarter, according to Cushman & Wakefield’s most recent published report.

— Chris Malone Méndez