Nearly 20% Of Home Sellers Take A Loss In This City—Compared To 4% Nationwide

 

Nearly one in five San Francisco home sellers (17.8%) are taking a loss on the sale of their home during the three months ending February 29, 2024—higher than any other metro and more than four times the nationwide share.

That’s according to a new report from Redfin. And that loss is likely due to home prices in the area coming back down after soaring to unsustainable levels during the pandemic.

That 17.8% is comparable with the 17.9% share recorded for the three months ending January 31—the highest share reached in 11 years.

Meanwhile, the nationwide share of home sellers losing money is much smaller (4.3%) thanks to home prices holding steady near record highs. That nationwide share is the highest recorded since May 2021, but it’s remained fairly stable over the past couple years, ranging between 2% and 4.5%.

Home sellers in New England are least likely to lose money on the sale of their homes, with less than 2% of sellers in Providence, RI, and Boston, MA, reporting a loss.

SOME SAN FRANCISCO HOME SELLERS BOUGHT WHEN PRICES PEAKED

San Francisco’s median home sale price has dropped significantly from the peak of $1.66 million reached in April 2022, falling 15% ($250,000) to $1.41 million as of February 2024.

So, while the Bay Area still has the priciest real estate market in the country, home sellers in this particular metro are more likely than those in any other city to take a loss on the sale of their home.

Pretty much anyone who purchased a San Francisco home during much of 2021 or 2022, when buyer competition was at its fiercest thanks to low mortgage rates, would have lost money if they’d sold during the first few months of 2024.

According to local Redfin Premier agent Christine Chang, San Francisco’s housing market is struggling more than other metros in the Bay Area.

Home prices have fallen from their peak, especially when it comes to condos. 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. Christine Chang - Redfin Premier Agent in San Francisco

Two things worth noting here:

• Most San Francisco homeowners who bought their homes during the past two or three years are staying put. And some of those who are selling are likely making that choice due to a life event (marriage, growing family, divorce, etc.) or because a job relocation has made a move necessary.
• San Francisco home prices have swung back up after bottoming at $1.28 million in January 2023, when home prices took a downturn as mortgage rates skyrocketed and put a damper on buyer demand. So, home sellers are more likely to make a profit on their home sale today, compared to a year ago.

DETROIT HAD THE NEXT HIGHEST SHARE OF HOME SELLERS TAKING A LOSS

After San Francisco, Detroit’s market has the highest share of home sellers losing money on the sale of their home (10.8%) during the three months ending February 29.

For a quick overview, here are the five markets with the highest shares of sellers taking a loss:

1. San Francisco, CA (17.8%)
2. Detroit, MI (10.8%)
3. Cleveland, OH (8.2%)
4. St. Louis, MO (8.1%)
5. Chicago, IL (7.9%)

As with San Francisco, home sellers in the above metros in the Rust Belt and Midwest are seeing significant drops in home prices since their pandemic highs. In Detroit, for starters, the median home sale price has dropped about 20% from its pandemic peak.

On top of that, markets in both Detroit and Chicago are taking a hit because they’re among the U.S. metro areas homebuyers are most likely to move away from.

HOME SELLERS IN NEW ENGLAND AND SOUTHERN CALIFORNIA WERE LEAST LIKELY TO LOSE MONEY

Homes were least likely to sell at a loss in these metros:

• Providence, RI (where just 1.2% of homeowners who sold during the three months ending February 29 lost money)
• Boston, MA (1.7%)
• Anaheim, CA (1.8%)
• Fort Lauderdale, FL (1.9%)
• San Diego, CA (1.9%)

In all of the above, less than 2% of the homes sold during the three months ending February 29 sold for less than the homeowner originally paid.

Among homeowners who sold at a loss, home sellers living in relatively inexpensive metros typically lost the least.

Metros where home sellers suffered the smallest losses:

1. Pittsburgh, PA (-$15,000)
2. Kansas City, MO (-$15,000)
3. Detroit, MI (-$16,812)
4. Houston, TX ($-16,990)
5. Milwaukee, WI (-$18,000)

THE VAST MAJORITY OF HOME SELLERS ARE MAKING A PROFIT ON THE SALE OF THEIR HOME

Now for the good news: across the U.S., roughly 96% of home sellers are making a profit on the sale of their home. Even in San Francisco, more than four out of five (82%) sellers are selling for more than they originally paid. The typical seller in this metro sold for a tidy profit of $482,000, while the nationwide median gain stood at $196,016.

Today’s sellers are far more likely to make a profit than to take a loss on the sale of their home because the median U.S. home sale price is only 5% below the peak set in mid-2022. It’s also more than $100,000 (+40%) higher than it was before the start of the pandemic.

California home sellers typically see larger gains on a home sale compared to elsewhere in the U.S., because this state is home to the most expensive housing market in the country.

Aside from San Francisco, home sellers reaped the biggest median gain in another part of the Bay Area. In San Jose, where 5% of home sellers lost money on the sale of their home and the other 95% made a profit, the median gain was $695,000.

Next up is Anaheim, CA, where only 2% of home sellers took a loss during the three months ending February 29, 2024, while 98% gained from their home sale, with a median gain of $510,000.

Sellers are gaining the least on their home sales in relatively affordable metros in the Rust Belt, but those median gains are still close to six figures. Cleveland, OH, had the smallest seller profits at a median $70,650—a sizable chunk of the area’s $175,000 median sale price.

Metros with the smallest gains from home sales during the three months ending February 29:

1. Cleveland, OH ($70,650)
2. Detroit, MI ($72,000)
3. St. Louis, MO ($90,000)
4. San Antonio, TX ($94,110)
5. Pittsburgh, PA ($99,298)
6. Virginia Beach, VA ($97,000)
7. Warren, MI ($102,000)
8. Milwaukee, WI ($103,250)
9. Indianapolis, IN ($109,300)
10. Houston, TX ($110,000)
11. Chicago, IL ($110,000)
12. Cincinnati, OH ($110,000)
13. Minneapolis, MN ($114,000)
14. Philadelphia, PA ($117,000)
15. Kansas City, MO ($120,000)

Key Details: 

• A new report from Redfin shows nearly 20% of home sellers in San Francisco taking a loss—over four times the national share (4%), largely due to home prices in the area coming back down after soaring during the pandemic. 
• New England home sellers were the least likely to take a loss

Posted by Sarah Lentz | Apr 18, 2024 | Housing Market

https://nowbam.com/nearly-20-of-home-sellers-take-a-loss-in-this-city-compared-to-4-nationwide/

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