Condos account for the bulk of San Francisco’s new housing inventory. But with concerns about a possible recession, legions of tech layoffs and a downtown corridor that closely resembles a ghost town, nobody’s willing to buy—and it looks like economists’ grim prediction of an epic commercial real estate crash is already unfolding in San Francisco.
New data from Compass Real Estate Group indicates that the city’s Greater Downtown condo market is showing the devastating effects of remote work and tech’s economic woes.
Looking at sales of two-bedroom units sold between August and November, condo prices in SF’s Downtown and SoMa District have slipped by 16% in the past year. It is a decline that far outpaces surrounding regions: Condo sales prices in the rest of San Francisco dropped by just 7% from 2021 to 2022.
Condo prices in SoMa/Downtown are the lowest they’ve been since 2017.
Other factors point to a stagnating condo market in Downtown San Francisco, where most of the city’s new housing is being built—and, conversely, the region with the most number of empty condos and empty office spaces.
Compass data shows Downtown condos also tend to stay on the market longer, averaging 65 days on the market, compared with the rest of the city’s 40-day average. The difficulty in selling these units—combined with the high number of condo vacancies and the lack of demand for them—means that the city’s Downtown neighborhood now has a condo inventory (or “Monthly Supply of Inventory”) more than twice as high as the rest of the city.
In other words, it would take double the amount of time to sell all the vacant units in the Greater Downtown region than in the rest of San Francisco.
Luxury condo sales, in particular, took a huge hit during the pandemic and are now selling at a fraction of their previous listing prices—a statistic that is especially true in SoMa and Downtown SF.
Just 19% of SoMa/Downtown condos sell over the final list price, compared with 40% of condo sales outside of this region. And the median sales price for Downtown condos sits at 4% below the original list price, according to Compass.