Recent data shows the extent of a “real estate crisis” unfolding in San Francisco that appears only to be getting worse. The Bay Area has garnered a reputation for lawlessness and crime, worsened by disastrous policies and governance.
The Kobeissi Letter, described as “an industry-leading commentary on the global capital markets,” recently shared some analysis of data from the housing market in San Francisco compared to the broader United States.
“The real estate crisis in San Francisco seems to be getting worse. 1 year ago, 5.0% of all homes in San Francisco were being sold at a loss. Now, 12.3% of all homes sold in San Francisco are selling at a loss, well below the national average of 3.0%. This is roughly double the rates seen in Chicago and New York, triple the rate seen in Phoenix, and quadruple the rate seen in Austin. The median loss of homeowners who sell at a loss in San Francisco hit a record $100,000, the highest in the US. Things are turning quickly in San Francisco,” The Kobeissi Letter posted on X (formerly known as Twitter).
The real estate crisis in San Francisco seems to be getting worse.
1 year ago, 5.0% of all homes in San Francisco were being sold at a loss.
Now, 12.3% of all homes sold in San Francisco are selling at a loss, well below the national average of 3.0%.
This is roughly double the… pic.twitter.com/DDXPsZeFMp
— The Kobeissi Letter (@KobeissiLetter) September 10, 2023
As seen in the data visualization, San Francisco generally followed the trends of the broader domestic housing market for much of the 21st century. Notably, the city even outperformed the rest of the country in shares of homes selling for less than the seller paid during the unraveling of the housing market post-2008.
However, since 2022, real estate valuations have been collapsing as the percentage of homes that sold for a loss skyrocketed to over 12 percent or over four times higher than the national average. Generally speaking, the housing market has held up remarkably well, considering mortgage rates are well north of 7 percent.
However, this is obviously not the case in the Bay Area. As The Kobeissi Letter points out, San Francisco is far outpacing even cities of a similar caliber, coupled with a median loss of $100,000 for those unfortunate enough to have sold for less than their purchase price.
The American Tribune recently reported on the crashing real estate prices being felt around the city, as valuations on commercial real estate are plummeting. For example, an 11-story office building in a prime location in downtown San Francisco recently sold for just under $41 million compared to its most recently assessed value of $121 million. If property values around the city continue to crash at such rates, this could pose a serious in municipal finances as the city will collect significantly less property tax.
Moreover, San Francisco has seen many businesses pack up and leave as the deteriorating conditions of the city have hindered the ability to conduct business. The American Tribune has covered various stories of prominent businesses closing their doors throughout the year.
Owner of the luxury San Francisco department store Gump’s, John Chachas, wrote a scathing letter to both city and state leaders about the “destructive” governance and policies contributing to the decline of the Bay Area. The owner also announced that his store, which has been in operation for nearly 166 years, could have to close its doors due to the deterioration. “Such abject disregard for civilized conduct makes San Francisco unlivable for its residents, unsafe for our employees, and unwelcoming to visitors from around the world,” Chachas said.
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