PHOTO: San Francisco. CITY GIRL NETWORK
In recent months, nearly one in five homes sold in San Francisco has resulted in a financial loss, a significantly higher rate compared to the national average. The city’s once-booming property market is now grappling with various challenges, including a surge in violent crimes, break-ins, and rampant drug activity, prompting both current residents and potential newcomers to reconsider their living arrangements. The proportion of San Franciscans experiencing losses on home sales, at 17.8 percent over the three months leading up to February’s end, approaches levels not seen in a decade, and stands four times higher than the national average of 4.3 percent.
Nearly one in five homes sold in San Francisco sold at a loss in the three months to February 29, new data has revealed
According to data from Redfin, the average homeowner in San Francisco who recently sold at a loss incurred a deficit of $155,500, significantly higher than the national average loss of around $40,000 for the same period. Local real estate agent Christine Chang notes that San Francisco’s housing market is experiencing more turbulence compared to other areas in the Bay Area, with declining home prices, particularly noticeable in the condominium sector. Chang attributes this shift not solely to high mortgage rates but also to a decline in the city’s appeal post-pandemic. Tech companies and prominent retailers have relocated elsewhere, and some residents cite feeling less secure in the city, prompting them to consider leaving.
Local Redfin Premier agent Christine Chang said San Francisco has lost some of its appeal post-pandemic
The decline in San Francisco’s appeal is further exemplified by the transformation of once-thriving hubs like Westfield Mall, now a mere shadow of its former self due to the exodus of major retail tenants. Reports of rising crime rates, drug-related activities, and homelessness have left residents feeling unsafe and contributed to a sense of unease among potential buyers and current inhabitants alike.
Experts suggest that worsening drug use and crime are significant factors driving the increased number of homes being sold at a loss in San Francisco. Despite being the most expensive real estate market in the US, with median prices reaching a peak of $1.66 million in April 2022, San Francisco has experienced a 15 percent drop in median sale prices since then, amounting to approximately $250,000, as of February this year.
Worsening drug-use and crime has contributed to higher numbers of homes selling for a loss, experts say (Pictured: Drug users in the city)
Since the housing market recovered from the 2008 financial crisis, the percentage of home sellers in San Francisco selling for a loss has been below the national average, per Redfin data, but this trend reversed in 2021
Although the Bay Area still maintains its status as a premier real estate market, many who purchased homes during the peak of the market in 2021 and 2022 are now facing losses if they choose to sell. However, Redfin suggests that the market is showing signs of recovery, with prices rebounding from a low point in January 2023 to potentially higher levels than a year ago.
Following San Francisco, other cities experiencing a notable share of homes selling at a loss include Detroit, Cleveland, St. Louis, and Chicago, all of which have seen declines in home prices from their pandemic peaks. Conversely, Providence, Rhode Island, stands out with only 1.2 percent of homeowners experiencing losses on home sales, showcasing a more stable housing market in comparison.
SOURCE: THE DAILY MAIL