According to a new report from 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.
That’s a higher share than any other major U.S. metro and is quadruple the national rate of 3%. Next came Detroit (6.9%), Chicago (6.5%), New York (5.9%) and Cleveland (5.8%).
In San Francisco, the typical homeowner who took a loss sold their home for $100,000 less than for which they bought it. San Francisco tied with New York for the largest median loss in dollar terms. Nationwide, the typical homeowner who sold their home for less than they bought it for lost $35,538.
Homeowners were least likely to sell at a loss in San Diego, Calif.; Boston; Providence, R.I.; Kansas City, Mo.; and Fort Lauderdale, Fla. In each of those metros, roughly 1% of homes sold for less than the seller originally paid.
San Francisco home sellers were most likely to lose money because the region has experienced outsized home-price declines. It was one of the first markets to see prices sink when high mortgage rates triggered a slowdown in the housing market last year.
By April 2023, San Francisco’s median home sale price was down a record 13.3% year over year, more than triple the nationwide drop of 4.2%. As of July, it was down just 4.3% year over year to $1.4 million, but that compared with a national gain of 1.6%. The total value of homes in San Francisco has fallen by roughly $60 billion since last summer, a separate Redfin analysis found.
Prices in the Bay Area have fallen fast for a few reasons: First, it’s home to the most expensive real estate in the country, meaning housing costs had a lot of room to come down. It has also been hit hard by layoffs in the technology sector. Additionally, it’s not as popular as it once was; remote work has allowed scores of people to relocate to more affordable areas.
San Francisco, Detroit, Chicago and New York, which top the list of metros where home sellers are most likely to take a loss, all rank among the top 10 metros Redfin users are looking to leave.
Even though home prices have fallen from their peak, a majority of home sellers are still reaping significant financial gains. Nationwide, 97% of home sellers sold for a profit during the three months ending July 31, with the typical home that sold going for 78.4% ($203,232) more than the seller bought it for.
Even in San Francisco, most homeowners are still making a lot of money. The typical home that sold in the metro went for 70.5% ($625,500) more than the seller bought it for. Today’s home sellers are making money despite an ongoing housing downturn in part because a scarcity of homes for sale is fueling bidding wars and propping up home values.
Most people who bought when home prices peaked would lose money if they sold now, so they’re not selling. Many of the homeowners who are selling today have owned their homes for long enough to make a profit regardless of month-to-month fluctuations in housing values.
Photo by Gabriel Tovar at Unsplash
