San Francisco suffers the most: How the 2023 U.S. home price drop affects sellers in 2023
In 2023, one in eight San Francisco home sellers money at closing. Such data is provided by the company Redfin. What factors provoked this situation, and how are things in other American cities?
Losses of home sellers in numbers
The typical homeowner in San Francisco who suffered a loss sold their home for $100,000 less than they bought it for. San Francisco equaled New York City in terms of median dollar losses. Nationwide, the typical homeowner who sold their home for less than they bought it for lost $35,538.
Why are San Francisco home sellers losing money?
San Francisco has experienced a sharp drop in home prices, which has been the main cause of losses for sellers. This city was one of the first places where real estate prices began to decline under the pressure of high mortgage interest rates.
By April 2023, the median home sale price had fallen a record 13.3 percent, more than three times the national average decline of 4.2 percent. Although the decline slowed to 4.3% by July, the total value of homes in the city fell by an impressive $60 billion.
The drop in prices is due to several factors. First, San Francisco is known for its expensive real estate, which influences the price correction. Second, the city has been hardened by layoffs in the tech sector, which have reduced demand for housing. Third, telecommuting has allowed many residents to move to more affordable regions.
San Francisco compared to other cities
According to Redfin, the national average of sellers who have suffered a loss on a home sale is 3%. This is significantly lower than in San Francisco.
San Diego, Boston, Providence, Kansas City, and Fort Lauderdale have comparatively small percentages of foreclosures. Here, only about 1% of homes were sold for less than their owners originally paid.
Most sellers are still on the positive side
It's worth noting that most sellers in the U.S. still benefit from real estate sales. According to Redfin, 97% of sellers sold a home at a profit in the past three months; the typical home sold was worth 78.4% ($203,232) more than the amount for which the seller bought it. Even in San Francisco, most homeowners are still making big bucks. The typical home sold in that city was worth 70.5% ($625,500) more than its original value.
Percentage of homes sold for less than the amount the seller paid