A significant majority of home sellers continue to sell their homes for a profit nationwide, but various factors are driving an increase in the number of home sellers losing money on home sales in certain areas, according to Redfin.
San Francisco is a prime example. Per Redfin’s data, 12.3% of homes, or approximately one in eight, sold in the City by the Bay from May through July was bought for less than the seller’s original purchase price. That’s the highest share in the country and up from just 5% last year. It’s also four times the national rate of just 3%.
Other cities with higher rates of homes sold for a loss include Detroit (6.9%), Chicago (6.5%), New York (5.9%) and Cleveland (5.8%).
“Some condos in the Bay Area are now worth less than their owners bought them for in 2018 and 2019, in part because commuting from Oakland and other outlying areas into downtown San Francisco isn’t really a thing anymore,” said Redfin agent Andrea Chopp. “There are buyers out there, but they’re a lot more cautious and picky than they were when mortgage rates were low. The Bay Area housing market was unsustainable before, so this correction is probably healthy, but the unfortunate thing is prices remain unaffordable for a lot of people — especially with rates now above 7%.”
Some of those condos (and other homes sold at a loss in the Bay Area) are worth significantly less than when their owners bought them. In San Francisco, the typical homeowner who sold their home at a loss did so for a median of $100,000 less than what they paid for it. That’s also the largest loss nationwide in sheer dollar terms, tied with New York. Nationwide, the typical homeowner who sold for less than their purchase price lost $35,538.
In the specific case of the Bay, some are selling for a loss simply because, as the most expensive geographic market in the U.S., housing costs simply had a lot of room to drop. San Francisco and surrounding areas, which have a heavily tech-oriented labor force, has been rocked by layoffs in that sector. Prices in the Bay Area have also faced downward pressure from an efflux of workers, with remote work allowing many to seek out more affordable places to live.
Interestingly, while the shift to remote work has raised the number of homes sold at a loss in some areas, the return to onsite work is driving the same change in other places. In Boise, Idaho, for example, it’s not common for homeowners to sell at a loss, but Redfin agent Shauna Pendleton noted that she has some clients who will have to take a $100,000 loss on their home sale. Those clients are expats from Seattle whose employers’ remote work practices allowed them to live in less pricey Boise, but with many employers mandating such employees’ returns to the office, many are having to sell their homes after occupying them for just a year.