SF home prices drop $370K from peak, per Compass report

Shift started in May as interest rates rose, stock market fell

(Illustration by The Real Deal with Getty)
(Illustration by The Real Deal with Getty)

San Francisco home prices dropped nearly 20 percent between April and July, according to a recent Compass report. Prices hit their highest median price ever in April 2022 at just over $2 million, but started dropping in May as the market began a shift brought on by higher interest rates and compounded by a falling stock market.

By July, median prices had dropped to just under $1.7 million, which “plunged” appreciation rates nearly 10 percent below July 2021 figures, according to the report. Annual price appreciation rates are still up 6 percent, year-to-date, but even that marks a drop from the 11 percent annual appreciation rate in 2021.

The condo market also peaked in April, with median sales going above even pre-pandemic highs to hit close to $1.4 million. By July, the median had dropped more than 14 percent to $1.2 million.

The cooling trends are occurring across the Bay Area, according to Compass Chief Market Analyst Patrick Carlisle, who authored the report. “Dramatic changes” in demand, supply, overbidding, price reductions and appreciation rates all point to a softening market, he wrote, even as many homes continue to sell quickly and over asking price.

In San Francisco, price reductions across all active listings dropped slightly in July, but were still up substantially year-over-year, from 164 last year to 288 in 2022. Monthly home sales were also down about a third over July 2021 numbers, with condo sales down more than 35 percent compared to a 27 percent decline for single-family homes.

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Condos accounted for the vast majority of listings as of Aug. 1, comprising about three-quarters of the 1,300 active and “coming soon” listings at that time. Last summer, the number of active listings barely topped 1,000 at its highest point.

Summer often represents a lull in the market, as buyers and sellers take off for vacations and travel. But even accounting for seasonal trends, this year was particularly slow, with 420 sales in July 2022, down more than 200 from the year prior. Yet houses that did sell went quickly, in about 20 days, a number that has stayed fairly constant all spring and summer.

Condo sales are taking longer, climbing steadily since a low around 30 days in April and now at about 40 days, still well below the average days on market for most of the latter half of 2020 and first half of 2021, when that market was most impacted by the pandemic.

Homes above the $3 million threshold had more or less been following last year’s sales figures until June, when they began diverging. By July the number of homes selling at that price point was down almost 50 percent compared with one year prior. The same is true of homes above $5 million, which fell from 18 to 9 year-over-year, although some of those July sales were among the biggest deals of the year, including the sale of Mark Zuckerberg’s Mission Dolores home for $31 million. A $34.5 million Pacific Heights property also traded in July to the billionaire owners of the Tampa Bay Buccaneers and Manchester United soccer club, the biggest deal of the year in the city thus far. Both of those deals involved buyers and sellers so wealthy they were unlikely to have been impacted by the wider economic trends facing the lower end of the luxury market.

“The less-expensive home segments started to see significant declines in activity after the big interest rate increases in late March/April, declines which accelerated as interest rates rose and mortgage-rate locks expired,” Carlisle said via email. “The luxury segment seemed to be a step/half step behind, with the significant decline in activity occurring after the major stock market declines in May.”

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(Illustration by Steven Dilakian for The Real Deal with Getty Images)
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