Amid high interest rates, rising inflation and a tech bloodbath that led to thousands of laid-off employees across SF companies, another sign of worsening economic conditions has arrived: Plummeting home sales.
Home sales in San Francisco have dipped to the lowest numbers seen since 2011, according to real estate company Compass’s monthly report. When zoomed out to the greater Bay Area, the drop looks even worse: October 2022’s home sales were the lowest since 2007, declining by nearly 40% from 2021.
The bottom line? Demand is decreasing as Bay Area buyers navigate an increasingly unstable economy.
Higher-price homes in San Francisco saw some of the most significant drops in sales: The number of homes worth at least $3 million dropped 43% from 2021, outpacing the general market decline of 38% in October. The inventory of listings priced at least $10 million is also much higher than usual.
There are also more SF houses and condos on the market than before, with more than 1,500 “Active” and “Coming-Soon” listings as of Nov. 1. Yet, demand for houses and particularly for condos, co-ops and tenancies-in-common (TIC) housing has cooled off since the spring, after a pandemic-era boom in autumn 2020.
Normal for the Season or Cause for Concern?
Home sales typically follow seasonal trends. The market usually ramps up in September and October, before slowing down during the November to December holiday period, as many sellers pull their homes off the market to wait for the new year. That’s why the number of homes for sale and the number of price reductions on active listings usually peak during October.
Yet, this year’s market shows worrisome figures, even for a period of expected market slowdown.
The number of price reductions on active listings is almost as high as it was in October 2020, during the pandemic’s housing market nadir. Active housing listings in October this year outpace 2021, 2019 and 2018 levels, and the amount of time SF homes spend on the market is steadily climbing. In SF, overbidding list prices—home sales closing over list pricing—dropped from 73% in April to 50% in October. And across the Bay Area, the number of expired listings or those withdrawn without selling tripled since the spring, at a rate of 12% withdrawn in October alone.
Compass’s findings reinforce new, sobering stats from the SF Controller’s Office. In-person office attendance in SF continues to lag behind other metropolitan areas, and local economic indicators point to ongoing housing market weakness: SF’s single-family home prices fell 6.2% since May, compared with a statewide housing price drop of 2.5% from their peak in June. The city’s median home price has also dropped 7%, according to real estate company Redfin.