Bay Area house prices fall 25% since April peak

Compass study finds in SF, $400K drop has erased pandemic gains

Compass' Patrick Carlisle (Compass, Getty)
Compass' Patrick Carlisle (Compass, Getty)

House prices in the Bay Area have fallen 25 percent in just eight months, according to a new report from Compass.

In April 2022, the median Bay Area house cost $1.56 million, but by December that number had fallen to $1.16 million.

“In 2022, the market saw a dramatic shift from Q2 (spring), at which time the market peaked after a dramatic 10-year upcycle supercharged at its end by the pandemic boom, through the second half of the year, when the market cooled significantly,” Compass Chief Market Analyst Patrick Carlisle wrote in the report. “Prompted by a number of economic factors — especially inflation and interest rates, and financial markets — this played out in substantial declines in sales volumes, median sales prices, appreciation rates and virtually all the standard measurements of buyer demand.”

San Francisco home prices have fallen 20 percent from their peak, according to the recently released fourth-quarter Compass report. SF reached a new median high of $2 million in the second quarter of the year, but precipitous price drops in the latter half of the year essentially wiped out all pandemic-era pricing gains.

The city’s new median price point of just under $1.6 million is for houses, not condos, which are down 13 percent since hitting a high in the second quarter of 2022 of $1.3 million. Condo prices now sit just above $1.1 million, according to Compass. Condos did not see the same run-up in prices as the single-family home market, since people prioritized space and privacy during the pandemic, and sales today are running close to early 2018 figures.

It is now less expensive to buy a house in San Francisco than in San Mateo and Marin counties, where the median price is more than $1.8 million and $1.6 million, respectively. Santa Clara is just $25,000 behind San Francisco’s median and has fallen 17 percent since its market high in the second quarter. Marin was 18 percent off its peak and San Mateo was slightly below that.

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Year-over-year, San Francisco had by far the furthest fall in appreciation, down 13.5% compared with 9% in San Mateo, 8% in Alameda, 6% in Santa Clara and 7% for the overall Bay Area. The North Bay was the one bright point in the region, with year-over-year prices up around 2% in Marin and Napa and 5% in Sonoma. Sonoma’s market also peaked in the second quarter at $860,000, but it had dropped only 7.5% by the end of last year.

In terms of the numbers of homes sold, Bay Area volume was down 41 percent this December compared with last December, and down 24 percent when comparing all of 2021 to last year.

Luxury and ultra-luxury sales volume has fallen even further, down 60 percent from the previous December for homes over $3 million and 69 percent for homes of more than $5 million. The average days on market was 44, up from 31 the previous December and more than double the 19 days from in spring.

“Some buyers are making the best deals in years,” Carlisle wrote in the report. “For sellers, pricing, preparation and marketing are now critical, while buyers shouldn’t hesitate to negotiate aggressively, especially on homes with longer days-on-market.”