San Francisco Homebuyers Are Paying $18,000 Less Per Year Than Those Who Bought When Rates Peaked

San Francisco Homebuyers Are Paying $18,000 Less Per Year Than Those Who Bought When Rates Peaked

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Prospective homebuyers are getting some relief as monthly housing payments fall from their peak due to declining mortgage rates and home prices. It’s one reason for renewed homebuyer interest. 

The median monthly housing payment for San Francisco homebuyers has dropped 14.8%, from $9,973 to $8,496, since mortgage rates hit their pandemic-era peak in October, the biggest percentage decline of the 49 most populous U.S. metros. 

The San Francisco drop is more than double the nationwide decline of 7% (to $2,500). The typical monthly housing payment fell from October 2022 to December 2022 in all the metros in this analysis, with the biggest drops in West Coast tech hubs and some of the nation’s most affordable areas. 

Next come Pittsburgh, with the typical monthly payment falling 12.4% to $1,267, Seattle (-12.1% to $4,509), Oakland, CA (-11.6% to $5,443), Detroit (-11.3% to $1,050) and San Jose, CA (-10.6% to $8,116). 

Although the typical U.S. monthly housing payment is coming down from its peak, it’s still much higher than it was a year ago, when mortgage rates were averaging 3.5% and the typical U.S. home sold for $378,000. The average 30-year fixed mortgage rate dropped from 6.9% in October to 6.36% in December, and the median U.S. home-sale price dropped from $400,000 to $388,000. 

The drop in housing costs has helped fuel a notable uptick in homebuyer demand following a nearly yearlong slump in the housing market. Pending home sales rose 3% in December, the first monthly increase in 14 months. In San Jose, pending sales were up 21%—more than any other metro Redfin analyzed. 

In more recent weeks, slowing inflation has sent mortgage rates down further, resulting in lower monthly housing payments and piquing the interest of some sidelined buyers. 

“Now that rates are down, a lot of Bay Area house hunters are starting to tour homes and make offers again. We’re in a sweet spot where prices and rates have dropped enough to make a meaningful difference in housing payments but there’s still less competition than there has been for the last few years,” said San Jose Redfin agent Angela Langone. “But competition has started to ramp up as more buyers are back in the market and new listings remain scarce.”

Bay Area home prices have dropped

Monthly housing payments dropped most in tech hubs, along with Pittsburgh and Detroit, because home prices are declining faster in those places than in other parts of the country. 

San Francisco, San Jose, Oakland, Seattle, Pittsburgh and Detroit were all among the 19 U.S. metros where sale prices declined from a year earlier in December, and their drops were among the biggest.

Home prices have declined fastest in the Bay Area for several reasons. It’s the most expensive part of the country– the typical San Francisco home sold for $1.3 million in December even after an 11% year-over-year price decline–which means prices had a lot of room to fall. Additionally, the Bay Area isn’t as popular as it once was because the prevalence of remote work means many people don’t need to commute to the office. 

Bay Area- and Seattle-based tech workers have also been hit hard by the economic downturn, with a surge of layoffs in the industry and stumbling stock prices. Lower stock prices means less money for down payments, and unemployment or the prospect of it means fewer people are searching for homes. But tech stocks have already begun to tick up in the new year and most laid-off tech workers are finding a new job quickly

Change in Median Monthly Housing Payment by U.S. Metro, October 2022 to December 2022
U.S. metro area Payment change: Percentage Payment change: Dollars Monthly housing payment: Oct. 2022 Monthly housing payment: Dec. 2022
San Francisco, CA  -14.8% -$1,477 $9,973 $8,496
Pittsburgh, PA  -12.4% -$179 $1,446 $1,267
Seattle, WA  -12.1% -$620 $5,129 $4,509
Oakland, CA  -11.6% -$712 $6,155 $5,443
Detroit, MI  -11.3% -$134 $1,184 $1,050
San Jose, CA  -10.6% -$965 $9,082 $8,116
Portland, OR  -9.8% -$357 $3,633 $3,275
Washington, DC  -9.8% -$340 $3,464 $3,124
Phoenix, AZ  -9.6% -$289 $3,027 $2,738
Chicago, IL  -9% -$182 $2,018 $1,836
Kansas City, MO  -9% -$182 $2,018 $1,836
Sacramento, CA  -8.7% -$315 $3,633 $3,317
New Brunswick, NJ  -8.4% -$260 $3,094 $2,834
Dallas, TX  -8.4% -$236 $2,825 $2,589
Miami, FL  -8.3% -$265 $3,195 $2,931
Boston, MA  -8.1% -$342 $4,238 $3,896
Cleveland, OH  -7.8% -$105 $1,345 $1,240
Warren, MI  -7.8% -$142 $1,816 $1,674
Milwaukee, WI  -7.8% -$143 $1,850 $1,707
Austin, TX  -7.7% -$245 $3,195 $2,950
Los Angeles, CA  -7.7% -$426 $5,550 $5,124
Minneapolis, MN  -7.7% -$184 $2,407 $2,222
Denver, CO  -7.6% -$292 $3,834 $3,543
Nassau County, NY  -7.5% -$310 $4,104 $3,794
Jacksonville, FL  -7.4% -$181 $2,435 $2,255
Montgomery County, PA  -7.4% -$212 $2,859 $2,647
New York, NY  -7.2% -$317 $4,440 $4,123
Anaheim, CA  -6.7% -$428 $6,354 $5,926
Fort Lauderdale, FL  -6.7% -$176 $2,624 $2,448
San Diego, CA  -6.7% -$353 $5,281 $4,928
Las Vegas, NV  -6.6% -$182 $2,758 $2,577
Providence, RI  -6.6% -$183 $2,792 $2,609
West Palm Beach, FL  -6.5% -$186 $2,859 $2,673
Atlanta, GA  -6.3% -$157 $2,489 $2,332
St. Louis, MO  -6.3% -$99 $1,581 $1,482
Cincinnati, OH  -6.2% -$104 $1,682 $1,578
Indianapolis, IN  -6% -$111 $1,850 $1,739
Riverside, CA  -5.8% -$211 $3,592 $3,382
Baltimore, MD  -5.7% -$130 $2,287 $2,157
Tampa, FL  -5.5% -$139 $2,523 $2,383
Orlando, FL  -5.5% -$144 $2,624 $2,480
Columbus, OH  -5% -$100 $2,018 $1,918
Fort Worth, TX  -4.9% -$119 $2,422 $2,303
Newark, NJ  -4.9% -$151 $3,094 $2,944
Charlotte, NC  -4.5% -$117 $2,597 $2,480
Virginia Beach, VA  -4.4% -$92 $2,085 $1,993
Houston, TX  -4.2% -$94 $2,220 $2,126
Nashville, TN  -3.2% -$95 $2,994 $2,899
Philadelphia, PA  -3.1% -$54 $1,722 $1,668

Methodology

This report is based on a Redfin analysis that compares median monthly housing payments in October 2022 and December 2022 using MLS and Freddie Mac data. For this analysis, housing payments are made up of principal, mortgage interest, annual property taxes of 1.25% of the purchase price and annual insurance of 0.5% of the purchase price. 

“Homebuyers” refers to buyers who are taking out a 30-year fixed-rate mortgage; some buyers pay all cash and others use other mortgage types. 

We included the 49 most populous U.S. metros with sufficient housing and mortgage data in this analysis. 

Dana Anderson

Dana Anderson

As a data journalist at Redfin, Dana Anderson writes about the numbers behind real estate trends. Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster. For more information about working with a Redfin real estate agent to buy or sell a home, visit our Why Redfin page.

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