13% of home sellers in SF and on the Peninsula lose money

One in eight home sellers in San Francisco and on the Peninsula are taking a loss, with a typical shortfall of nearly $123,000.

More than 13 percent of residents who sold homes in San Francisco and San Mateo counties between August and October went into the red, the San Jose Mercury News reported, citing figures from Redfin.

The rate of home sales losses is four times the national figure and the highest share of any major region in the country. The typical loss in both counties was $122,500.

After San Francisco and the Peninsula, the regions with the highest share of losing sellers were Detroit and Chicago at 7 percent, followed by Cleveland and New York at 6 percent.

The cause of sellers’ financial pain: rising mortgage rates, according to the newspaper.

Higher rates have dragged down home prices from their historic highs during the pandemic. And some sellers who bought at the top of the market in 2021 and last year are forced to accept less than what they paid for their homes.

Owners selling at a loss are typically doing so out of necessity, according to Sheharyar Bokhari, a senior economist with Redfin. They might have a job loss, divorce or other event that doesn’t allow them to wait for a turnaround.

“They’re moving because they have to,” Bokhari told the Mercury News.

Bokhari blamed the share of losing sellers in San Francisco and on the Peninsula on prices for expensive properties that spiked during the boom, then fell furthest when rate increases squeezed buyers and chilled the market.

In October, the median single-family home in San Mateo County was priced at $2.1 million, according to the California Association of Realtors. That’s a 13 percent decline from the local market’s peak in April last year, when the median topped $2.4 million.

There was a bigger drop in San Francisco, where prices fell 20 percent to $1.65 million during the same period. The median price across the Bay Area dropped 15 percent to $1.27 million in October.

In the South Bay, 3 percent of sellers took a typical loss of $100,000. In the East Bay, closer to 4 percent traded at a median loss of $50,000.

Falling mortgage rates may offer sellers some relief.

Last week, Freddie Mac reported the fifth straight week of mortgage rate declines as the average rate for a typical home loan dipped to 7.22 percent after hitting nearly 8 percent in late October.

Some economists say rates could continue falling well into next year as inflation ebbs, though few are predicting a return to the all-time lows that fueled the market during the pandemic, when rates hit a low of 2.67 percent in December 2020.

“The current trajectory of rates is an encouraging development for potential homebuyers,” Sam Khater, chief economist with Freddie Mac, said in a statement.

— Dana Bartholomew

Read more

Residential

National

Cold feet: Buyers bail on home contracts at highest rate in 10 months

Residential

San Francisco

SF condo prices drop almost 10%, inventory up by a third in last year

Residential

Los Angeles

LA ranks near bottom of 2023 residential market forecast