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Home Prices Are Starting to Buckle in Tech-Fueled San Francisco

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(Bloomberg)-San Francisco, one of the most expensive residential cities in the United States, has begun to fall for the first time since the pandemic worsened.

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Median home prices in the city fell 3% year-on-year to $ 1.89 million after surpassing a record $ 2 million in the last three months, according to a Thursday report by brokerage firm Compass. rice field. The latest price was still 20% above the March 2020 level when the Covid-19 blockade began.

“We’re not sure yet, but one of the longest and most dramatic real estate market upcycles in history has, strangely, been a deadly pandemic,” said Patrick Carlyle, a market analyst in the San Francisco Bay Area. It may have peaked this spring after being attacked. I wrote a note on Thursday for the compass.

Home sales and rising prices have cooled nationwide as interest rates soared this spring after the Federal Reserve moved to curb inflation. Sellers are beginning to significantly reduce price offers in the hottest US markets such as Las Vegas, Denver, Austin and Nashville. Still, many of these areas are still above previous year’s levels, but are only rising at a slower pace.

San Francisco was particularly hit by the slow return of office workers after the pandemic and residents set out for cheaper cities. And the tech industry, a major driver of local wealth, is facing a recession, with inventories declining and some start-ups dismissing workers.

In the larger bay area, including Silicon Valley and East Bay, home prices rose 2% year-on-year to a median of $ 1.43 million in June, according to the compass. It was the slowest growth since the year-on-year level in May 2020.

In the meantime, Bay Area prices have risen at double-digit annual paces, supported by a combination of record low mortgage rates, a surge in equity investment wealth, and demand for space by teleworkers.

Carlyle said in a report that the Bay Area homes were taking a long time to sell, the bidding war wasn’t too fierce, and the share of sales above the listing price was low. But housing collapses comparable to 2008 are unlikely, he said. That’s because most owners today have affordable mortgages and aren’t forced to sell them.

“The fix isn’t a crash,” he writes.

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