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Coronavirus pandemic driving home buyers out of the Bay Area
Redfin reports this week that a quarter (24.5%) of home sellers in the San Francisco area cut their list prices in the four weeks leading up to August 2020, the highest percentage since at least 2015.
That is more than double the year-over-year rate and marks the largest annual increase in the share of active listings with price drops among the 50 most populous US metropolitan areas.
The rate of price drop in San Francisco was steady at over 24% in late summer and was 24.1% in the final period of the Redfin data – the four weeks ending August 23, 2020.
San Francisco was one of only 11 of the 50 largest metropolitan areas where the proportion of listings that drove down prices rose, up from 11.4% last year to 24.1%. Chicago, Philadelphia, and New York were among the ten other places where price drops rose year over year in the four weeks ended August 23.
“San Francisco buyers want fire sale deals, and they won’t settle until they find them. You’re in no rush because there’s so much uncertainty right now – if the price isn’t right, they can just rent a Lake Tahoe home for a year until their employer gives concrete advice whether or when they have to go back to the office, “said local Redfin agent Carlos Barrientos. “I see a lot of buyers making lowball offers that are initially turned down but are called back a few weeks later by the sellers saying they are ready to bring the price down.”
High-rise condos and smaller, dated homes – where a home office can be inconvenient or difficult to set up – are the types of property that prices are most likely to fall, Barrientos added.
San Francisco’s housing market has weakened during the coronavirus pandemic as its residents fled the dense, expensive city to find more space to make remote working and homeschooling more viable. In the second quarter, 22.7% of Redfin.com users searching from the San Francisco area wanted to move – compared to 21% last year and the second-highest proportion of all locations analyzed by Redfin (after New York only).
As a result of that shift, the number of homes in the San Francisco market increased 75% year over year in the four weeks ended August 23, forcing sellers to drop prices and giving buyers the upper hand. The median sales price for properties sold during the reporting period rose 6.6% year over year to $ 1.5 million, but was well below the 11.4% nationwide increase. It’s worth noting that the proportion of homes with price drops is a leading indicator, so the trend would likely not carry over to the median selling price until those homes find buyers and close their sales over the next several months.
“It might not happen right away, but we’ll likely see house prices in San Francisco fall at some point,” said Redfin chief economist Daryl Fairweather. “It’s clear that many homeowners feel that San Francisco is past its peak and that it’s better to sell sooner than later. Of course, the future of home prices largely depends on whether people return to the office or for that.” Companies work remotely. ” long term. “