Bloomberg News reports that a five-bedroom palatial property built in 1932 with hand-carved doors, stained-glass windows, and a picturesque view was on the market for $9.5 million in April. However, the price slumped to $7 million in June.
Although it was auctioned last week with an opening bid of $4.5 million, there were no offers that emerged. This kind of a scenario, especially in a tech-fueled city that has a lot of wealth and where home prices have been escalating this kind of a change is stark.
The higher mortgage rates drive the cost of ownership, and few people are willing to or can pay premium costs for residing in a region that is regarded as the most expensive for housing. Tech industry layoffs, dropping stock prices, and slumping cryptocurrencies are factors adding to this region’s scenario.
The real estate market is taking a hit already. The San Francisco metro median cost of a home dropped 0.5% in June in comparison to what it was a year earlier to $1.58 million, as per Redfin Corp. This is only one of the nation’s top 100 metro regions to register a drop, as per data shown by the company, despite the price is highest in the United States.
Lone Loser
San Francisco is the only of the major cities in the US where the price of homes dropped in June. The economy of San Francisco is already struggling to regain ground from the pandemic as remote work culture gains prominence, with the tech firms, including Salesforce Inc. and Twitter Inc., reducing office space.
As the startups’ rapid growth metamorphosed into unicorns, there was a rapid inflow of tech workers in the city that pushed the home prices up by 120% in the last decade, according to Redfin.
Some of the executives working in tech companies that bought property against borrowing stocks is a move that helped them keep at bay capital gains when the home values were at their peak, now must turn to refinance their mortgage at higher rates, as per Aaron White, who is the chief growth officer at Vista Wealth Management, San Francisco which is an advisory firm.
Bloomberg News reports that the city has been struggling with rising instances of crime after so-called smash and grab thefts, as data indicate that the level of crime is not any different from what it was in 2019.
The last time in late 2018, when the borrowing costs escalated in San Francisco, the housing prices remained buoyant due to the initial public offerings like Uber Technologies and Pinterest that led to a supercharge of the affluent.
