San Francisco, California home prices have crashed!
According to Redfin median home sale prices in SF are now below February 2020. 2022 and 2021 gains have been erased.
I warned! I warned again! and again!
The peak median home price was back in April 2022 with a median sale price of $1.612M. Today it is $1.322M. In February 2022 it was $1.490M, in February 2021 it was $1.35M, and in February 2020 it was $1.410M.
From peak that is a drop of 17.9% for all home types. For single-family homes, the drop is 26.75%. That’s not a correction anymore. Redfin, most agents, and NAR continue to stick to YoY numbers versus peak but even that data isn’t pretty. Median sale prices have fallen in 24 of the 50 largest U.S. metros, with the biggest drops in northern California in San Jose, CA (-14.5% YoY), San Francisco (-20.8% YoY), Austin, TX (-11.2% YoY), Oakland, CA (-11.2% YoY) and Sacramento, CA (-10.7% YoY). If taking the data from the peak then most of the markets would be closer to 17 to 18% like SF and this is before doing any inflation adjustment of 6%.
Pending home sales have fallen in all 50 major U.S. metros. They fell most in Las Vegas (-54.2% YoY), Sacramento (-49.6%), Seattle (-47.3%), Portland, OR (-46.5%), and Riverside, CA (-45.2%).
It’s demand. Most in the real estate industry cling to false narratives of supply even though new listings are down and still lower than in 2019 but rising. 10 months of clinging to supply as home prices fall right in front of their noses.
Banks are tightening, non-bank lenders are panicking (some are bottom-scrapping and loosening standards) and the result will be even fewer buyers. Buyers are also better informed than in 2006 and won’t fall for the tricks nor have the incomes, savings, and credit scores to buy at these prices. Credit card debt is up, saving are falling, and inflation is eroding purchasing power every month. Mortgage applications are down 36% lower than the same week one year ago as the median mortgage payment rose to $2,061 in February, up $408 from one year ago.
They just don’t want to look at the data and the fact that we pulled in top-end buyers from 2020 to mid-2022, and record investor demand that created a bubble. They are done buying. With economic issues hitting tech, banking, finance, and stocks we aren’t going to see that demand return until the Fed goes back to 0 FFR and that isn’t happening this year. Even in a recession, I highly doubt they are going to repeat the Arthur Burns days if inflation is not near the 2% target rate. Any low rates could be used by banks to exit their AOCI losses on long-dated treasuries and provide no extra credit support to the economy.
Home prices are falling and more inventory is coming!