San Francisco’s real estate market plummets as tech layoffs reshape the city’s economic landscape.
At a Glance
- San Francisco housing prices have dropped to pre-pandemic levels, with condos and co-ops down 14.7% since May 2022
- Single-family home prices fell by 15.4% from their 2022 peak, now averaging $1.39 million
- The tech sector has seen a 20% workforce reduction, contributing to the housing market decline
- Despite price drops, the market remains competitive with homes receiving multiple offers
- Experts predict a slight nationwide increase in home prices by 2025, but San Francisco’s recovery remains uncertain
Tech Layoffs Hit San Francisco’s Housing Market Hard
The once-booming San Francisco real estate market is experiencing a dramatic downturn, closely tied to the wave of layoffs sweeping through the tech industry. As of December 31, the average home value in San Francisco stood at $1,216,087, marking a 5.6% decrease from the previous year. This decline is particularly pronounced in the condominium and co-op sector, where prices have plummeted by 14.7% since May 2022, reaching levels not seen since 2015.
The impact of tech sector layoffs on the housing market is undeniable. San Francisco recorded 10,200 permanent layoffs in 2023 alone, with the “Information” industry seeing a 20% workforce reduction since June 2022. This economic shift has led to a significant correction in house prices, making San Francisco one of the hardest-hit markets in the country.
San Francisco House Prices Drop Back to 2019, Condo Prices to 2015, as Tech Jobs in the City & Silicon Valley Evaporate after Drunken Hiring Binge
Housing Bust 2 reverses part of “Housing Crisis” when people with good incomes couldn't afford to live in SFhttps://t.co/Ww9N0gxfAd pic.twitter.com/6K7QS098L6— Wolf Richter (@wolfofwolfst) December 27, 2024
Iconic Buildings and Neighborhoods Feel the Pinch
The downturn is not limited to any one area of the city. Even high-profile properties like the Millennium Tower have been affected, with unit prices dropping by a staggering 44%. In a stark example of the market’s decline, a condo in this iconic building sold for just $615,000 in September, down from $1.1 million a decade ago.
“San Francisco’s housing market is suffering from high mortgage rates like every other market, but it is especially vulnerable because prices were already really high there and it is the center of the tech world,” Redfin’s Head of Economic Research, Chen Zhao said.
Single-family homes have not been spared either. Prices in this segment have fallen by 15.4% from their 2022 peak, now averaging $1.39 million. These figures underscore the broader economic metamorphosis taking place in the region, as the tech industry’s fortunes directly impact the real estate market.
A Competitive Market Despite the Decline
Despite the significant price drops, San Francisco’s housing market remains surprisingly competitive. Homes are still receiving an average of four offers and typically sell within 51 days. This paradox suggests that while prices have decreased, demand for housing in the city remains robust among those who can afford it.
The resilience of the market is further evidenced by historical data, which shows that recessions often lead to growth in housing prices. In fact, increases were observed in 7 out of 9 US recessions. This historical trend, coupled with the Bay Area’s enduring appeal, may help explain why the market remains competitive despite the current challenges.
As San Francisco grapples with its changing economic landscape, the future of its housing market remains uncertain. The National Association of Realtors predicts a 2% increase in home prices nationwide by 2025, with a median cost of $410,700. However, San Francisco’s unique position as a tech hub means its recovery may not follow national trends.
Who knows if it will recover at all?
