- Monthly housing costs in San Francisco have declined by 14.8% since their peak in October 2022, Redfin said in a report.
- One agent said that mass layoffs and lower stock prices could mean that home prices have further room to fall.
- However, housing inventory still remains “scarce” in the Bay Area as competition heats back up.
One city has emerged as an unlikely place where recent buyers are saving the biggest amount of money on their monthly housing payments: San Francisco.
While the Bay Area is well-known for its notoriously high housing costs, recent homebuyers in San Francisco have been benefitted the most from falling mortgage rates and softening demand. Monthly housing costs have dropped from more than $9,800 at the peak of the market in October 2022 to around $8,500 today. That 14.8% decline is the most significant between the 50 largest metro areas and more than double the national average over the same time, a new report from Redfin details.
“We’re in a sweet spot where prices and rates have dropped enough to make a meaningful difference in housing payments but there’s still less competition than there has been for the last few years,” Angela Langone, a Redfin agent who works the San Jose market, said in a statement.
But it’s not all gravy for new Bay Area homeowners. Overall, the median home price in San Francisco was still $1.28 million in December 2022. To Langone, this shows that home prices still have room to fall considering that remote work has made it so homebuyers don’t often have to consider their commute to an office when they purchase a home.
One factor that could push home prices lower is the high volume of layoffs that are impacting the tech industry, Langone added. For instance, companies like PayPal, Salesforce, and Google have collectively laid off tens of thousands of employees since the beginning of the year.
Another reason why Langone believes home prices will continue to drop is that the stock market is still facing headwinds from high interest rates. The Nasdaq Composite Index, which is primarily made up of tech stocks, has lost more than 4% of its value over the last six months, which has left some homebuyers — particularly tech workers who typically get lucrative stock bonuses — with less money for down payments.
Layoffs and lower stock prices have also helped drive down the cost of housing in other tech hubs like Seattle and San Jose, Redfin’s report shows. For example, the median monthly housing payment in Seattle declined by 12.1% between October 2022 and December 2022, or from more than $5,100 per month to around $4,500. In San Jose, the median housing cost declined from $9,000 to about $8,100 per month, representing a greater-than 10% decline over that period.
Looking ahead, Langone said she is encouraged by the fact that “a lot of Bay Area house hunters are starting to tour homes and make offers again.” However, inventory levels continue to be an issue as new listings “remain scarce,” she said.