More SF homes sell at a loss than anywhere else

Median loss was $100K this summer, not including staging costs or commissions

One in eight San Francisco homes sold at a loss this summer, the highest portion in the nation and four times the national rate, according to a new report from Redfin.
(Illustration by The Real Deal with Getty)

One in eight San Francisco homes sold at a loss this summer, the highest portion in the nation and four times the national rate, according to a new report from Redfin.

A little over 12 percent of San Francisco homes that sold between May and July traded for less than what their owners paid for them, with the median deficit of $100,000 tied with New York for the largest in the country. That figure doesn’t include additional possible losses due to staging costs or agent commissions. 

Detroit was the next-highest percentage at about half that amount. Nationwide, only 3 percent of homes sold at a loss during those months.

Home values in San Francisco had fallen by almost 8 percent year over year in June, a loss of nearly $60 billion in aggregate, according to Redfin data. Los Angeles saw the biggest decline in aggregate home value at nearly $153 billion, followed by Oakland at almost $86 billion. 

Decline rationale

Bay Area prices have fallen for a few reasons, according to the report. 

“First, it’s home to the most expensive real estate in the country, meaning housing costs had a lot of room to come down,” it reads. “It has also been hit hard by layoffs in the technology sector. Additionally, it’s not as popular as it once was; remote work has allowed scores of people to relocate to more affordable areas.” 

Compass Chief Market Analyst Patrick Carlisle pointed out that while it’s true that San Francisco values have come down, short-time owners who bought during the “relatively short period of the overheated pandemic boom” are the most likely to be impacted. 

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The Redfin data includes different types of residential properties and Carlisle made a distinction between single-family homes, which have largely gone back to 2020 prices, and condos, which are at 2015 prices, with those outside the downtown core closer to 2019 pricing. Single-family San Francisco owners who bought in 2015 have seen a median gain of 25 percent and those who bought in 2010 have more than doubled their money, according to Compass data. 

The Redfin report acknowledges that “even in San Francisco, most homeowners are still making a lot of money.” The median home that sold this summer went for 70.5 percent, or $625,500, more than the seller paid for it. 

Suburban sellers

Other Bay Area sellers are doing even better, according to Redfin. In Oakland, where about 3 percent of homes sold at a loss this summer, the median home sold at an 82 percent appreciation rate. In San Jose, the median home sold for more than double what its owners paid for it, even as about 3 percent of sellers took a loss.

“It is certainly true that most other Bay Area markets saw stronger pandemic booms and less market-correction declines [than San Francisco],” Carlisle said via email. 

Single-family homes in Santa Clara County have appreciated 31 percent and Alameda County homes are up 26 percent since the first summer of the pandemic, according to Compass data. San Francisco single-family appreciation, on the other hand, is down 6 percent in the same time period.

But Carlisle still thinks the current San Francisco downturn is more of a blip than a representation of long-term disinterest in the city. He noted the city has come back time and time again thanks to its “educated and affluent” residents and natural beauty.

“It undoubtedly has very serious challenges right now, but the idea that it is inevitably headed into an irreversible downward spiral into socio-economic catastrophe — often proposed by groups that frankly hate the whole idea of San Francisco — is, frankly, laughable,” he said. “Problems will have to be solved, but people will always want to live in San Francisco.” 

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