San Francisco home prices fall for the first time in a decade

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Median home prices in San Francisco fell 1% to $1.78 million between 2021 and 2022, the first annual decline the city has seen in a decade, according to new data from Compass.

The city last saw an annual decline in house prices between 2011 and 2012 as the city recovered from the effects of the Great Recession.

The prices of apartments, which have been hit hard by the pandemic, have yet to recover to 2019 levels, with the median apartment sale price in 2022 at $1.2 million, down 2% from a year earlier. In the wider Bay Area, house prices rose 3.2% over the same period.

However, these fluctuations varied by location. In the area that includes Bernal Heights, Potrero Hill and Inner Mission, median home prices rose 5.5% last year to $1.83 million, while in the area that includes Pacific Heights and Marina, there was an 11.4% decline to $4.86 million.

The latter district is home to many of the city’s most expensive luxury homes, which had far fewer buyers last year, with sales in the luxury home segment down 52% in the fourth quarter.

This is a dramatic change from the previous pandemic period, said Patrick Carlyle, market analyst at Compass, who wrote the report.

“At that time, the market was dominated by wealthy buyers. They had money, they were stuck in an orphanage, and they started buying big new houses and estates very quickly,” Carlisle said. “Now we’re in full swing and the decline in luxury home sales is outpacing the decline in more affordable market segments.”

These buyers tend to keep most of their money in stocks, and Carlisle said the slowdown is the result of volatility leading to more prudent spending habits. Public markets as a whole fell last year, with the S&P stock index down 19.4% and the Nasdaq high-tech index down 33.5% during 2022.

Fewer luxury homes being sold from hand to hand are also putting downward pressure on overall home prices. Looking specifically at the fourth quarter, median home sales prices in San Francisco were down 13.5% to $1.57 million, while apartment prices fell 12.5% ​​to $1.18 million. Quarterly sales decreased by 42% compared to the same period.

These cuts were the most notable of any county in the Bay Area. At the other end of the spectrum is Sonoma County, where median home prices rose 5% year-on-year last quarter.

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Other signs of cooling, including the average number of days properties spend on the market and the percentage of listed homes are also piling up.

Since last spring, higher federal interest rates have curbed the pandemic home-buying frenzy. As a result of the interest rate hike, the average 30-year mortgage rate more than doubled from 3.11% to 6.42% at the end of the year.

But don’t be surprised if the market picks up in the coming months, Carlisle said: low unemployment and lower inflation could attract more buyers.

“If this is combined with the decline in home prices that we are seeing, buying a home is starting to look more attractive and, frankly, more feasible for a lot of people,” Carlisle said.

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texasstandard.news contributed to this report.

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