San Francisco bucked logic and saw its home prices increase during COVID-19, peaking to a record a year ago this time. But the high price of San Francisco houses is starting to come down.

It seems standard editorial policy at the San Francisco Chronicle these days that they now use the phrase “doom loop” at least three times weekly in a headline. So it should not be that alarming to see the Chronicle’s Sunday headline “S.F. home prices are still declining. Is it one sign of the ‘doom loop’?” Even less alarming is how the second sentence of this article contains the phrase “declining prices on their own, especially in one of the nation’s most expensive markets, aren’t necessarily another data point signaling a San Francisco ‘doom loop’ in the making.” So the decline in home prices seems likely neither doomy or loopy.

Screenshot via Zillow

But there are some interesting and uniquely San Francisco variables in the dip in San Francisco home prices, seen in these Zillow graphics on which the Chronicle is reporting here. Yes, home prices are down 11.2% compared to a year ago this time, and stand at an average home price value of $1.27 million. But that’s down from a record high of nearly $1.5 million, and basically just a return to pre-pandemic home sale prices. Some economists just chalk it up to the outside factor of remote work allowing employees simply choose to live someplace cheaper.

“A big reason that San Francisco is such an expensive place is that there’s housing demand from people who need to be in San Francisco to access high-wage jobs in the city,” San Francisco’s chief economist Ted Egan tells the Chronicle. “And if the need for the accessibility to those jobs is not as great because of remote work, then people won’t bid as much for the housing that’s nearby.”

The decline in home prices may be a normal correction, just like we’re seeing tech layoffs among companies who grew too aggressively during the pandemic. And there are other potential variables here that have nothing really to do with San Francisco: interest rates are higher, the stock market is down, inflation remains persistent.  

But there is some concern, as San Francisco home prices are dropping more quickly than prices are elsewhere in the state. Still, this Zillow data focuses on a snapshot taken in March 2023. A separate multi-year analysis from Redfin shows that prices generally slump in January, and then pick up as we head into the spring and summer months. So this decline may have already reversed, or could be on its way to doing so.

As far as the very high end of the housing market, Socketsite has recently reported on a "masterpiece" of a modern single-family home on Telegraph Hill that has seen its asking price slashed 40% — but it's still asking $10 million. And a three-bedroom condo in the Lumina tower with sweeping Bay views just fetched $5.45 million, which is $350,000 below what it originally sold for five years ago.

Related: Bay Area Home Prices Actually Dropping; Cities Here Dominate the ‘Fastest-Cooling Housing Markets’ List [Joe]

Image: Bernadette Gatsby via Unsplash