SAN FRANCISCO (KRON) — Home prices across the Bay Area may be dropping, but sales are still slowing, according real-estate company Redfin.
Real estate company Redfin says Zoom towns and tech hot spots saw huge price increases as remote work was normalized during the pandemic. Now, those areas are seeing some of the steepest declines in home prices.
In a recent housing report from real estate experts at RE/MAX, the Bay Area is seeing the second largest drop in home sale prices since 2022. San Francisco home prices are down 12.7% over the past year; this brings the median sales price of a home in San Francisco to $960,000.
Bozeman, Montana, saw a huge increase in home sales and skyrocketing prices after remote workers sought more space during the beginning of the pandemic. The median sales price for a home in Bozeman has now dipped by nearly $100,000 compared to last year.
|Bozeman, MT||$632,500||$734,000||-13.8 %|
|San Francisco, CA||$960,000||$1,100,000||-12.7 %|
|Phoenix, AZ||$415,000||$450,000||-7.8 %|
|Birmingham, AL||$255,000||$274,950||-7.3 %|
|Trenton, NJ||$316,000||$340,000||-7.1 %|
Though lower prices would typically signal an increase in potential buyers, the technology industry’s struggles have impacted the Bay Area in particular. Redfin listed several reasons why housing markets in tech hubs are cooling off:
- Topsy-turvy tech stocks — With tech stocks falling more than 30% in 2022, many tech workers who use their stock proceeds for down payments have been out of luck
- Tech layoffs — Layoffs have impacted thousands of workers across the Bay Area, and many people have bowed out of their home search altogether due to losing their job
- Low inventory — Due to high interest rates and a tumultuous market, many people aren’t willing to put their home up for sale due to uncertainty they’ll be able to buy a new one
- Unsustainable pandemic home prices — housing prices rose quickly during the pandemic, but now even those who could afford those prices are being pushed out of the market
- High mortgage rates — Mortgage rates are currently around 6.4%, and that’s more than double the the rates seen in 2020. This interest rate hike can translate to a monthly payment that’s hundreds, if not thousands, of dollars higher than it would have been in 2020.
- Home prices are still high — Though home prices are coming down, many are still to expensive for prospective buyers, especially with the raised interest rates. This is especially true in the Bay Area.
San Jose-based Redfin manager Kimberly Douglas says that the scarcity of properties available on the market is heavily impacting home sales. Part of that is also being driven by high interest rates.
“Sellers are locked in because they can’t justify giving up a 2.9% mortgage rate to buy a new home with a 6.5% rate. Everything coming on the market between $1 million and $2 million is getting multiple offers and selling quickly. I have one listing coming up in a desirable neighborhood with highly rated schools, and my only fear is that it’s going to sell too fast, leaving the owners no time to find something new.” — Kimberly Douglas, Redfin Manager
After the collapse of Silicon Valley Bank, the Federal Reserve System raised the interest rate by a quarter-percentage point, a much smaller increase compared to previous hikes. Some hope this slowed increase will signal an end to the rate hikes for the foreseeable future.