Redfin: San Francisco home sellers are 4 times more likely to sell at a loss

In many housing markets across the country, home prices are still hovering around their pandemic peak despite mortgage rates that are pushing two-decade highs—but San Francisco is not one of them. The average San Francisco home value is down 11.5% over the past year, and 13.2% from its peak, according to Zillow. For homeowners looking to sell, that spells trouble. San Francisco home sellers are four times more likely than the average U.S. seller to take a loss, according to Redfin. 

“Roughly one of every eight (12.3%) homes that sold in San Francisco during the three months ending July 31 was purchased for less than the seller bought it for, up from 5% a year earlier,” Redfin’s data journalist, Lily Katz, and senior economist, Sheharyar Bokhari, wrote in a report published today. “That’s a higher share than any other major U.S. metro and is quadruple the national rate of 3%.”

Not to mention that the typical San Francisco homeowner that took a loss, sold their home for $100,000 less than what they bought it for. Meanwhile, nationwide, the typical homeowner that took a loss on their home, sold it for $35,538 less. 

“San Francisco home sellers were most likely to lose money because the region has experienced outsized home-price declines,” Katz and Bokhari wrote. “It was one of the first markets to see prices sink when high mortgage rates triggered a slowdown in the housing market last year.”

A separate Redfin analysis found that the total value of homes in San Francisco fell by nearly $60 billion since last summer. There are few factors behind San Francisco’s (and the Bay Area’s) price declines; for one, it’s already expensive, so as Redfin put it, housing costs had room to come down. Additionally, San Francisco, likely more than any other city, was hit hard by layoffs in the tech sector. But it’s also not as popular as it once was, according to Redfin, and remote work made it so that most people can live and work from wherever they’d like. 

“Some condos in the Bay Area are now worth less than their owners bought them for in 2018 and 2019, in part because commuting from Oakland and other outlying areas into downtown San Francisco isn’t really a thing anymore,” local Redfin real estate agent, Andrea Chopp, said in the report. 

It’s clear that homeowners are more likely to take a loss on their home if they’re selling shortly after buying, and this is especially true for those that bought when home prices peaked because demand largely inflated values during the pandemic. 

As for other markets, Detroit followed behind San Francisco, with 6.9% of homes sold during the three months ending July 31, purchased for less than what the seller bought it for. Then there’s Chicago, with 6.5% of homes sold for less than what the seller bought it for, during that same period, followed by New York City, where 5.9% of homes sold for less than what the seller bought it for. But in dollar terms, New York’s median loss is tied with San Francisco at $100,000. Detroit, for instance, was right behind San Francisco in terms of the share of homes sold for less than what the seller bought it for, but the median loss in dollar terms, was only $18,000.

Meanwhile, homeowners were least likely to sell at a loss in San Diego, Boston, Providence, Kansas City, and Fort Lauderdale. In each of those markets, roughly 1% of homes sold for less than the seller originally paid.

Still, the vast majority of homeowners across the country are selling their homes and making money. In the three months ending July 31, 97% of sellers nationwide sold for a profit, and the typical home that sold went for 78.4%, or $203,232, more than what the seller bought it for. Even in San Francisco, most homeowners are making money—“the typical home that sold in the metro went for 70.5% ($625,500) more than the seller bought it for,” Katz and Bokhari wrote. 

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