As home prices across the Bay Area continue to fall from the peaks seen a few months ago, San Francisco’s real estate market has been hit harder than most.
Although median home prices in the Bay Area writ large ticked down in the third quarter, San Francisco saw the single steepest decline of any county at 9%, according to a report from real estate agency Compass. That compared with a 1-2% decline over the same period for the entire region, according to Patrick Carlisle, the Bay Area chief market analyst for Compass.
The year-over-year quarterly decline is the first in San Francisco’s single-family home market since the beginning of 2019. This year, a typical seasonal slowdown has coincided with still-rising interest rates, sky-high inflation, stock market volatility and declining consumer confidence.
Carlisle attributed San Francisco’s outsize decline to a few factors, including the pandemic’s unique impact on the city and its demographics, as well as the negative spotlight placed on the city’s issues.
“Add bad branding to high housing costs and mix in demographic shifts, and all those things have added up to San Francisco being hit harder than the outlying counties,” Carlisle said.
He said that while the tech boom helped boost San Francisco’s housing prices to the top of the region in the pre-pandemic days, San Mateo, Marin and Santa Clara counties have leapfrogged the city more recently.
In the third quarter, San Francisco’s median home sales price was $1.65 million compared to $1.8 million one year prior. The figure brings median prices roughly to levels last seen in the third quarter of 2020.
The recent decline in home prices ranged by neighborhood, however. Neighborhoods that saw some of the largest drops included the Sunset and Parkside (-12%), the Mission and Bernal Heights (-11%) and the Richmond (-18%). On the other hand, median home values around West Portal and the Excelsior increased.
Condo prices, which were hit hard during the pandemic, are continuing to slide.
The $1.15 million median sales figure for condos was down 5% from one year prior.
Although the housing cooldown has raised concerns of a mortgage crash, Carlisle pointed to mortgage delinquency rates—typically an indicator of instability in the housing market—remaining close to an all-time low.
Instead, Compass’ report likened the correction to “a slow leak in an over-pressurized tire than a blowout on the highway at high speed.”
“One of the major things to understand about the housing market is the psychology that underlies and drives it,” Carlisle said. “Because the market has been so crazy hot for the last two years the whole concept of what’s normal has shifted.”
Kevin Truong can be reached at [email protected]