San Francisco currently has the most tortured luxury real estate market in the nation, a reality which occurs as residents flee the city, according to a new analysis from Redfin.
The real estate brokerage noted that the median sale price for luxury homes plummeted from $5.5 million to $4.8 million year-over-year as of the second quarter, marking a 12.7% decline and surpassing the decreases among the other fifty most populated American cities.
Other technology hubs on the west coast, such as Seattle and San Jose, witnessed 12.3% and 10.3% declines respectively. Oakland, which sits on the east side of San Francisco Bay, meanwhile saw an 11.1% decrease in median luxury home prices.
Redfin noted that luxury real estate valuations are increasing across the nation three times faster than typical residential real estate costs: constrained inventory has applied upward pressure on prices despite a broad decrease in demand for properties. Recent widespread layoffs in the technology sector have also damaged the west coast markets.
“Luxury housing prices in expensive coastal areas have taken a relatively big hit because those markets were already among the most expensive in the nation, meaning prices had more room to fall,” the analysis said. “Tech hubs have been disproportionately impacted by stock-market declines and tech layoffs, which have diminished buying power for high-end house hunters.”
More than 155,000 workers at technology companies based in the United States have been dismissed this year, according to an analysis from Crunchbase, which follows more than 93,000 layoffs last year. Investors have pressed firms to decrease headcount in order to prepare for a potential recession and calibrate downward from a surge in consumer demand two years ago.
San Francisco has also languished under increased crime and homelessness: violent crimes and property crimes spiked upward over the last three years, according to data from the San Francisco Police Department. Frustration over lackluster public safety prompted voters last year to successfully recall San Francisco District Attorney Chesa Boudin, who had implemented bail reform initiatives and decreased prosecution rates for violent offenses.
The Hoover Institution noted in one report that Presidio Heights, a neighborhood in San Francisco and one of the most expensive zip codes in the entire country, has violent crime rates twice as high as the national average. Former Democratic House Speaker Nancy Pelosi and other prominent political figures live in the neighborhood.
“Now, it is important to note that interpreting crime statistics is difficult, as some crime may be very concentrated in a few neighborhoods, with many other neighborhoods being safe; and some incidents are small, such as minor property crimes, while others are horrific, including violent crime,” the report added. “But taking note of these interpretation challenges doesn’t change the point that San Francisco is a dangerous city.”
Criminality and broader decreases in foot traffic have prompted brands such as Walgreens, Best Buy, and Whole Foods to shutter storefronts over the past two years. Some 8% of current San Francisco residents said they plan to move elsewhere within the next year, surpassing levels seen in every other major American city, according to data from the Census Bureau.
