A San Francisco home has been sold at half its original listing price, crystallizing the stark real estate climate in the city and in the U.S.
The home in the Russian Hill neighborhood sold for $9,990,000 on November 9, after being listed in October 2022 at $19,995,000. The house sat on the market for almost a year before selling at almost half the original list price in a city that is becoming emblematic of the nationwide housing slump.
Leslie Stretch, chief executive officer of software company Medallia, and his wife Heather, purchased the home for $20 million in January 2020 but listed it for sale just two years later after their youngest child went off to college, according to a 2022 report from the Sacramento Bee.
Newsweek has reached out to Nina Hatvany, the listing agent, via email for comment.
While the $10 million loss is significant, it is representative of the wider distress in the San Francisco housing market, as the city experiences a cooling period with a median listing home price decline of 2.3 percent from the previous year, according to Realtor.com.
Reports from real estate website RealDeal indicate that one in eight home sellers in the city and peninsula areas are enduring financial hits, with losses sometimes stretching into the hundreds of thousands. The luxury market, where properties once fetched astronomical prices, is particularly affected, with high-end homes like the aforementioned property seeing the steepest price reductions.
View from Lombard Street in San Francisco’s famous Russian Hill neighborhood. A tech CEO purchased a luxury home in this neighborhood for $20 million in 2020, and sold it for $9.99 million on November 9.
DANIEL SLIM/AFP via Getty Images
This San Francisco home is representative of a broader U.S. housing market that isn’t faring much better. Experts say that soaring mortgage rates and economic uncertainty is forcing some sellers to remain in a home that they want to sell or accept lower offers due to prolonged listing periods.
With 30-year fixed rates currently hovering above 7 percent alongside median home sales prices of $431,000, the housing landscape has become inhospitable for many would-be buyers and sellers.
Is the Housing Market Going to Crash?
Looking ahead, institutions like Fannie Mae forecast a “bottoming out” of home sales in early 2024, followed by a slow rebound. While mortgage rates are predicted to decline modestly in the next year, the path to recovery is expected to be gradual.
Joe Seydl, a senior markets economist at J.P. Morgan, previously shared with Newsweek that while the activity in the housing market has significantly declined, especially in the used homes sector, a total crash in prices isn’t anticipated. Seydl said that a balance between affordability and market stability might not require a dramatic drop in home prices. Instead, he suggests that growing incomes over the next few years could gradually restore affordability, even if mortgage rates and home prices remain steady.
The economist projects that if current conditions persist, it may take approximately three and a half years for the housing market to return to more affordable levels. The timeline could be shortened to two years if mortgage rates fall by 1 percentage point, he said.
Seydl also pointed out that new housing markets in lower cost-of-living areas are seeing more activity, aided by builders offering incentives and the flexibility of remote work, which is encouraging some to buy homes in cities like Phoenix, Austin and Minneapolis.
Despite the current market stagnation, experts show cautious optimism for the future. If the economy manages to avoid a recession and bond markets stabilize, a decrease in mortgage rates could significantly improve affordability, Seydl says.
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