Redfin Reports Nearly 20% of San Francisco Home Sellers Take a Loss on Their Sale, More Than Four Times the National Share

Rhea-AI Summary

In San Francisco, the typical seller losing money on their home sale is facing a loss of $155,500, while the national median loss is approximately $40,000. Redfin's report reveals that 17.8% of homes in San Francisco were sold at a loss, the highest in 11 years. The national share of sellers taking a loss is at 4.3%, the highest since May 2021. San Francisco's real estate market has seen a significant decline in prices, with the median sale price dropping 15% to $1.41 million from its peak of $1.66 million in April 2022. Despite this, the majority of sellers across the country are making profits on their home sales.

Positive

• None.

Negative

• San Francisco sellers are experiencing substantial losses due to the drop in home prices since the pandemic peak.
• The real estate market in Detroit, Cleveland, St. Louis, and Chicago has also seen significant declines, leading to a high percentage of homes being sold at a loss.
• Homes in Providence, Boston, Anaheim, Fort Lauderdale, and San Diego are least likely to be sold at a loss due to their stable market conditions and low percentage of sellers losing money.
• Despite some areas experiencing losses, the majority of sellers nationwide are still making profits on their home sales.

Insights

Real Estate Market Analyst

The data presented by Redfin highlights significant variances in home sale outcomes across different U.S. metros, with a particular focus on the San Francisco market. This information is indicative of market trends that are important for real estate investors and developers to consider. San Francisco's high percentage of homes selling at a loss is a stark contrast to the national average and suggests a localized market correction. The dramatic drop in median sale prices from the pandemic peak reflects a cooling market, potentially due to a combination of higher mortgage rates and a shift in the desirability of urban living post-pandemic.

From a broader perspective, the contrast between metros like Detroit and those in New England and Southern California provides insight into regional economic health and migration patterns. Rust Belt cities may be experiencing a decline due to economic stagnation and outmigration, while other areas continue to enjoy robust property markets. It's important for stakeholders to analyze these patterns for potential investment opportunities or to mitigate risks in their current portfolios.

Lastly, the fact that the majority of sellers are still making a profit, even in a market like San Francisco, should not be overlooked. This indicates that while certain segments are experiencing downturns, the overall market still holds value growth over time, which is a positive sign for long-term investors.

Economic Analyst

The reported loss figures in home sales, particularly in San Francisco, can be interpreted as a microcosm of broader economic shifts. The high loss in San Francisco, juxtaposed with the relatively low national median loss, may signal a recalibration of housing values in high-cost urban centers. This recalibration could be influenced by socioeconomic factors such as the exodus of tech companies and concerns over safety, as mentioned by the local Redfin agent.

Additionally, the data may be reflective of a broader economic cooling, as the housing market is often a leading indicator of economic health. The stability of the national share of sellers taking a loss over the past two years could suggest a market that is finding its equilibrium after the unusual conditions brought on by the pandemic. Investors and policymakers should pay close attention to these trends as they can have ripple effects across the economy, influencing consumer spending, housing starts and mortgage rates.

Urban Planning and Development Expert

The Redfin report underscores the importance of urban appeal and its direct impact on real estate values. San Francisco's loss of allure, as mentioned by the Redfin agent, could be due to a combination of socio-economic factors, including the relocation of businesses and safety concerns. This trend is not just about real estate; it's reflective of urban dynamics and the need for cities to maintain their competitiveness and livability.

Urban planning professionals should take note of these shifts as they can inform future development projects and urban renewal initiatives. It's essential to create environments that attract and retain residents and businesses, which in turn support property values. The contrast between the San Francisco market and those in other metros also suggests that urban planning strategies need to be tailored to specific regional challenges and opportunities.

In San Francisco, the typical seller who’s parting ways with their home for less than they originally paid is losing $155,500. Nationwide, the median loss is roughly $40,000.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Nearly one of five (17.8%) homes that sold in San Francisco during the three months ending February 29 sold at a loss, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s comparable with the 17.9% share hit during the three months ending January 31, which was the highest in 11 years.

That’s a higher share than any other metro, and it’s more than four times the national share of 4.3%. The national share of sellers taking a loss is the highest it has been since May 2021, but the share has been fairly stable over the past two years, hovering between 2% and 4.5%.

In San Francisco, the typical homeowner who sold at a loss parted with their home for $155,500 less than they bought it for, the largest dollar loss of any major metro. Nationwide, the median loss was $39,912.

This is according to a Redfin analysis of county records and MLS data across the 50 most populous U.S. metros.

Some San Francisco sellers are losing money because they bought when prices peaked during the pandemic

San Francisco home sellers are far more likely than sellers in the rest of the country to lose money because home prices there have dropped dramatically since the pandemic homebuying boom. Still, the Bay Area is home to the most expensive real estate market in the U.S.

San Francisco’s median sale price peaked at $1.66 million in April 2022, and has since fallen 15% ($250,000) to $1.41 million as of February. The typical person who bought in San Francisco at nearly any point in 2021 or 2022, when the housing market was red hot due to ultra-low mortgage rates, would have taken a loss if they sold during the first few months of this year.

Local Redfin Premier agent Christine Chang said San Francisco’s market is stumbling more than other parts of the Bay Area. “Home prices have fallen from their peak, especially when it comes to condos,” Chang said. “It’s not just because mortgage rates are high. San Francisco has lost some of its appeal post-pandemic. A lot of tech employers and big-name retailers have moved out of the city, and some of my clients have reported they’re leaving the area because they don’t feel as safe as they used to.”

It’s worth noting that most San Francisco homeowners who bought during the last two to three years are hanging on to their home. Some of the homeowners who are selling are likely doing so because a life event such as divorce or job relocation has necessitated it.

It’s also worth noting that San Francisco home prices have swung up after hitting a low point of $1.28 million in January 2023, when prices were declining in the face of elevated mortgage rates and tepid demand. Home sellers would likely fetch a higher price now than they would have a year ago.

Over 1 in 10 Detroit sellers take a loss on their home sale

After San Francisco, Detroit had the highest share of homes selling at a loss (10.8%) during the three months ending February 29. It’s followed by three other Rust Belt and Midwestern metros: Cleveland (8.2%), St. Louis (8.1%) and Chicago (7.9%).

Sellers in those places are more likely than most to lose money because, like in San Francisco, home prices have fallen quite a bit from their pandemic peak. In Detroit, for instance, the median sale price is down roughly 20% from its pandemic peak.

Additionally, housing markets in Detroit and Chicago have suffered because they’re typically among the U.S. metros homebuyers are most likely to leave.

Sellers in New England and Southern California least likely to take a loss

Homes were least likely to sell at a loss in Providence, RI, where just 1.2% of homeowners who sold during the three months ending February 29 lost money. It’s followed by Boston, Anaheim, CA, Fort Lauderdale, FL, and San Diego; roughly 2% of homes sold for less than the seller originally paid in each of those metros.

In dollar terms, homeowners who sold their home for less than they originally paid lost the least in metros where homes are inexpensive compared to most of the country: Pittsburgh and Kansas City, MO (-$15,000) come first, followed by Detroit (-$16,812), Houston ($-16,990) and Milwaukee (-$18,000).

The vast majority of sellers are making money on their home sale

Even in San Francisco, where roughly 18% of sellers who part ways with their home are losing money, more than four in five (82%) sellers are selling for more than they bought for. The typical San Francisco seller sold for $482,000 more than their purchase price during the three months ending February 29.

Nationwide, about 96% of sellers are earning money on their sale, with a median gain of $196,016. Today’s sellers are likely to sell their home for more than they bought it for because the median U.S. home-sale price is just 5% below the all-time high set in mid-2022. The median U.S. sale price is more than $100,000 higher (+40%) than before the pandemic began.

To view the full report, including charts, methodology, and more metro-level data, please visit:
https://www.redfin.com/news/san-francisco-home-sellers-lose-gain-money

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240410171559/en/

Redfin Journalist Services:

Ally Braun, 206-588-6863

press@redfin.com

Source: Redfin

FAQ

What is the typical loss for a seller in San Francisco according to the Redfin report?

The typical seller in San Francisco is facing a loss of $155,500 on their home sale.

What is the national median loss for sellers in the US?

The national median loss for sellers in the US is approximately $40,000.

What percentage of homes in San Francisco were sold at a loss?

17.8% of homes in San Francisco were sold at a loss, the highest in 11 years.

What is the national share of sellers taking a loss?

The national share of sellers taking a loss is at 4.3%, the highest since May 2021.

What is the current median sale price in San Francisco compared to its peak?

The median sale price in San Francisco has dropped 15% to $1.41 million from its peak of $1.66 million in April 2022.

What percentage of sellers in San Francisco are making profits on their home sale?

More than four in five (82%) sellers in San Francisco are selling for more than they bought for.