California City Sees sudden Change in Home Prices

The median price of condos in downtown San Francisco, an overvalued city during the pandemic-driven housing surge, has rebounded from the 10-year low seen just four months ago, according to recent data.

A chart updated to March of this year issued by Compass, a real estate data and analytics website, found that the price of condos in downtown San Francisco is now running higher year over year, nearing the $1 million mark.

In the rest of San Francisco, condos are more expensive, with a median sale price of more than $1.15 million, shown below in a graph shared by the company in its report. The graph was also shared on X, formerly Twitter, by vacation rental investor Rohin Dhar.

"Downtown San Francisco condo prices rebounded from around $800k at the end of last year to almost [$1 million] this year," the investor shared on the social media platform.

Read more: How to Get a Mortgage in 2024

Since the beginning of the year, and continuing into the spring season, "striking" shifts in supply and demand have been seen throughout the city, which has resulted in a "dramatic leap in the heat and competitiveness of market conditions," Compass wrote in its April report on real estate conditions in San Francisco.

"Based on current indicators, and what is being experienced on the ground as new listings arrive on the market, deals are negotiated, and homes go into contract, it appears almost certain that significant home price increases will continue into Q2 2023," the report said.

Downtown San Francisco is the center of large projects, new condo constructions, office buildings, and high-tech employment, Compass said in its report. However, last year, the city was rife with tech layoffs while mortgage rates hit their highest point since the turn of the century, subsequently pushing home prices down as buyers retreated from the market.

People are adjusting fairly quickly, the report suggests.

Read more: Compare Top Mortgage Lenders

Consumer confidence is at the highest point in nearly three years, Compass noted, while monthly inflation data has remained stable over the last six months, running from 3.1 to 3.3 percent, still higher than the Federal Reserve's 2 percent goal. In the eight weeks through early April, the average 30-year interest rate on a mortgage has ebbed between 6.74 percent and 6.94 percent.

The number of listings pending sale in the city in March was at the highest since mid-2022, the company said, and the three-month rolling median price of condos in the city was up 3.5 percent in March on a year-on-year basis.

Lower on a year-on-year basis, however, home sales volume has yet to recover, but based on pending-sale activity, it "should jump substantially in April," Compass said.

The turnaround in San Francisco real estate came quickly. Newsweek reported in December that home prices in the city had plunged to 10-year lows as a result of the pandemic's aftermath and an exodus of major retailers.

According to Redfin, the broader San Franciso real estate market is currently "very competitive." The real estate company said that homes in the city receive an average of four offers per listing, and sell in roughly three weeks.

Newsweek has reached out to Compass by email for comment on Tuesday.