San Francisco and Silicon Valley Housing Markets Plunge in Price as Startups, Crypto, Tech, Social Media…

Overall in California, prices declined year-over-year as sales fell, more than doubling supply. No dear, this is not just a seasonal fall.

By wolf richter For wolf street,

San Francisco and Silicon Valley are now in solid leadership roles of California’s ongoing housing bust, with sales plunging and prices moving south from the peak in April at astonishing speed.

Almost everything that could come together came together. After two years of exodus of workers due to working from nowhere, the collapse of the startup and crypto scenes began in 2021 and continues unabated, leading to early entries in my pantheon. broken stock, Mortgage rates jump in early 2022. Employment in Big Tech to decline through mid-2022. By that time, the Fed had been steadily raising its policy rates, and quantitative tightening was kicked This was punctuated by the chaotic disintegration of the workforce at Twitter and its ecosystem over the past two months.

Local budgets have plunged into deep deficits – although most are still flush with cash from pandemic funds received from the federal government and state governments.

Vacant office space in the market for lease and sublease continues to rise, while landlords have started filing for drastic reductions in assessed values ​​to reduce their property taxes, which is going to further cut revenue. Is.

This is compounded by New York Times stories that Twitter had stopped paying rent on its leased office spaces, and was instructed not to pay vendors. At least one of those unpaid vendors—a Silicon Valley company whose software was licensed by Twitter—has trial last week in San Francisco Superior Court for nonpayment. It added, “Immediately following the closing of Musk’s purchase of Twitter, Twitter declined to pay outstanding quarterly invoices, which were due on November 30, 2022, and Twitter declined to pay any future invoices.” disclaims any liability for…”

These are all signs that the housing market is about to get a lot messier. Prices fell the most in San Francisco, followed by the Silicon Valley counties of San Mateo and Santa Clara.

in San Francisco.

average price of single family homes Sales in San Francisco fell 11.4% from October to $1.50 million in November, according to the California Association of Realtors, and are down 27% from the peak in April. A bad looking chart:

condo prices fell Up 4.3% from last month to $1.15 million and 9.5% year-to-date. Since the peak in April, the median condo price is down 15.5%. Condo sales are down 49% in November.

Seasonally, the wettest months are December and January. So it is yet to come.

But who will buy in the spring selling season, Prices normally rise as demand increases in the spring; But who would be the enthusiastic tech worker who would want to borrow against the depreciated value of their stock options to pay more for a house? Those lucky ones who still have a job and stock options?

Housing markets in San Francisco and Silicon Valley are tied to the boom-and-bust cycle of the startup scene — now combined with the crypto scene and crypto — and they are tied to stocks of startups and big tech and social media companies. In the region, to value the actions and stock options to be done locally. Everyone is vomiting.

Year-to-date, the median price for single-family homes in San Francisco fell 21%, marking the sixth straight month of year-over-year declines. This was the biggest year-over-year decline since the peak of the housing bust 1:

Silicon Valley, San Mateo County,

The median price of single-family homes in San Mateo County, which forms the northern part of Silicon Valley, fell 6.2% from October to $1.78 million, and is down 26% from the peak in April.

Year-to-date, the median home price declined by 20%.

Silicon Valley, Santa Clara County,

Santa Clara County, which forms the southern part of Silicon Valley and includes the Bay Area’s largest city, San Jose, is lagging behind, but moving in the right direction. The median price of single-family homes fell 1.5% from October in November to $1.60 million, and is down 19% from the peak in April:

Year-to-date, the median home price declined 5.5%, the first significant year-over-year decline in this cycle. Prices had already experienced significant year-to-date declines in 2018 and 2019, and money-printing to the tune of trillions, the stock market boom, and interest rate suppression have started to propel prices up again.

Currently, Santa Clara County is a few months behind San Francisco and San Mateo, it seems.

all over california,

Sales of single-family homes in California plunged 47.7% in November from a year earlier, according to the California Association of Realtors, the biggest decline since 1980. Condo sales fell 46%.

Unsold inventory more than doubled year-over-year to 3.3 months’ supply, and days on the market more than doubled — before sellers took unsold homes off the market again.

For California as a whole, the median price for single-family homes fell another 3.0% in October to November, pushing the price down year-over-year (-0.6%). The median condo price fell 2.1% in October to November, reducing year-over-year gains to just 2.7%.

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