Despite the fact that inventory levels are significantly higher and asking prices have dropped, the number of homes in contract to be sold across San Francisco is down over 30 percent on a year-over-year basis. And in fact, pending sales in San Francisco are poised to drop to their lowest level in over six years by the end of the week, not only seasonally but in the absolute as well.

31 thoughts on “Pace of Home Sales in San Francisco Continues to Drop”
  1. It’s becoming clear that a San Francisco residence is no longer a prerequisite to a well paid tech job, as the companies who demanded people come back into the office just used that as a ruse to get people to quit before massive layoffs to save the cost of severance. And many of the people who did uproot their families and come back are now laid off and so people won’t be making that mistake again.

    Everyone else is work from wherever, and your tech salary goes a lot further if you move away, not so much if you move here.

    1. What are examples of companies that performed layoffs following RTO plans? These seem largely decoupled based on my observations, and I’d like to think I’m paying close attention.

      My understanding is that the vast majority of top-paying companies continue to used market-based compensation, keeping SF/NYC/Seattle at the top. Top-paying companies that have moved to flat pay everywhere are notable because they are few and far between.

      1. Salesforce is THE example. Largest tech employer in SF and has been calling employees back to SF and consolidating satellite offices for over a year, prior to the layoffs. Other companies using it as cover to do the same.

        1. Salesforce does not actually have a full RTO policy in effect, from what I can find. The most I could find was “Some sales employees who live near offices were asked to work at company locations Tuesday through Thursday” as of December 1.

          This feels like cobbling together multiple different things to try to push a consistent narrative. The facts on the ground is are fact a lot more distributed.

          1. I wouldn’t rely on press releases. Talk with some of their senior executives, office managers and facilities staff.

          2. Starting now, we are encouraging teams to gather in-person, as long as it’s safe and in alignment with local laws. We’ve proven that we can come together safely in-person through Dreamforce and our 65+ open offices around the globe. And I’ve seen first-hand how these gatherings can fundamentally improve team dynamics after months of not seeing each other. That’s why we’re encouraging all managers to bring their teams together — for a strategy session, workshop, or holiday party — by the end of the year.”

    2. Companies who demanded people come back used that as a ruse — a theory based off what? Twitter?

      And many of the people who did uproot their families and come back are now laid off and so people won’t be making that mistake again. — this is based off what? nothing you could ever point to, that’s for sure.

      Everyone else is work from wherever, and your tech salary goes a lot further if you move away, not so much if you move here. — No they aren’t. Many companies have partial in person policies in place. And, as it’s been pointed out, many companies have adopted a WFH policy that takes location into account.

      In short, that was a bunch of baloney.

      1. Startup growth is generally based on loss-leading market share creation/expansion which is correlated with employee growth/capital burn rate.

        As the cost of borrowing goes up so must the capital burn rate climb down. Hence, layoffs.

        1. It doesn’t have to be just startups. Capital conservation kicks in every American corporate as cost of borrowing goes up. This isn’t to claim that SF RE prices will fall. They could fall, stagnate or rise. All indications thus far – rates will rise.

      2. You should have been around this site in the late aughts when Tipster would routinely proffer up complete nonsense based on absolutely nothing that could be verified.

        1. With respect to the aughts and Great Recession era downturn, keep in mind that sales (i.e., demand and a leading indicator of market strength) started trending down in 2005, a year before values in the southern neighborhoods peaked, which we called, followed by an early 2007 peak for the middle-tier neighborhoods and a top-tier peak in the first half of 2008.

          The downturn then lasted through early 2012, at least for the residential market, at which point property values in San Francisco had dropped around 20 percent on average, with drops ranging from nearly 50 percent in Bayview to around 10 percent in Pacific Heights and greater volatility for condos – which tend to be a leading indicator for the market overall – across the board.

          All of which brings us back to the current market, drivers and trends at hand.

          1. This is what I never understand about the “leading indicator” moniker for Condos. If during the last downturn condos had a “greater volatility”, and they didn’t drop first the “southern neighborhoods” did, then what were they a leading indicator of?

          2. So when sales start trending down, prices will peak 1 or 2 or 3 years later depending on the neighborhood, as was experienced in 2005? That’s not what we’re seeing now, right? That really doesn’t seem like a very reliable indicator of anything, or maybe it’s a leading indicator of market strength for the next few years? Reasonable conclusion is it does not have any real predictive value.

      3. Trying to use RTO to either cut costs or weed out “quiet quitters” is definitely going on. There’s little point in paying severance to someone who is barely motivated to stay.

        “”When asked if companies expect to lose or have lost talent due to RTO, 77% said they have lost or expect to lose talent, with 17% reporting they are attempting to cut costs through attrition anyway. The other 60% reported they are trying to retain talent.

        “The 17% who are cost-cutting and using RTO to do so are following high-profile models from Elon Musk or Mark Zuckerberg. Their companies forced workers back as a way to implement reductions in their workforces,” said Challenger.”

        This is from a survey of companies and although only 17% admitted to trying to use RTO to encourage attrition, consider that the weight given to companies controlled by Elon Musk and Mark Zuckerberg is probably much more considerable then a bushel of small startups.

        I’ve seen some anecdotes of RTO being mandated from on high, but not actually being enforced in practice. Some combination of RTO being a Musk-esque litmus test of loyalty, the willingness to come back to the office being more important then the actually being in the office, and/or middle managers just silently not enforcing the high level policies. It’s a tricky issue of losing who you want to lose and keeping who you want to keep while minimizing overall costs.

    3. SF is still the prerequisite for a well paid executive or investor job, but not your standard mid-level engineer. I’m bullish on the radius 30-90 minutes from SF in all directions as plenty of companies are sticking with a hybrid approach, even one day a week. Employees also have to hedge in case they switch jobs and that new company requires in-office time. People also have family and social networks in the area.

        1. Sand Hill Road is no longer what it used to be. Its a shell of its former glory.
          What has happened is innovation has moved global. And venture capital followed.
          We don’t produce ‘Silicon’ anymore in Silicon Valley. And Software can be developed/sustained from anywhere globally – thanks to ‘networking’ developed in Silicon Valley.

          1. I would have thought the same too but that is not what I’m seeing. There’s still plenty of VC capital spent on Bay Area firms. And I haven’t really seen much competition for first place in innovation market. There are a few hot spots like Hsinchu and coastal Israel. India remains mostly a service provider to firms in other countries. I do however suspect that mainland China could become a major player. They have to in order for their tech sector to survive. The USA and friends have cut them off from much leading edge tech, so they’ll need to create their own.

          2. It no longer has a monopoly but Sand Hill isn’t anywhere near a shell.

            Apple, Alphabet, Meta, Netflix and Nvidia are all ‘Silicon’ Valley companies. Not a single FAANG/MAMMA in SF.

          1. Nearly a 50% drop. If you factor in inflation its more than 50% drop. Is that a sign of unrecoverable decline? Maybe, maybe not – depends on cost of credit now and in future. Silicon Valley must be able to demonstrate that it is a viable destination for yield on investments. What new areas of technology do you expect can realize yields comparable to past performance?

          2. “What new areas of technology do you expect can realize yields comparable to past performance?”

            Pizza delivery drones, AI toilets, crypto-boba, self-driving sushi…

          3. @two_beers – so more automation, human labor replacement and time value utility monetization. This time though, there is a splintering of innovation globally and the covid situation was a forceful catalyst.

            Other countries have chosen to monetize such value locally rather than funnel it back to SV as was the case previously. Even within the US, we’ve seen several companies shift to low tax/low cost regions. We’ll see…

          4. “What new areas of technology do you expect can realize yields comparable to past performance?”

            Some candidates: AI, battery technology, fusion, digitalization of business processes, biotech, cybersecurity

          5. Increasingly it looks like industries will cannabalize themselves, also locally. ChatGPT and Google comes to mind … Also some reversals, like cabbies making more $$$ than Uber drivers.

            There are a lot of changes to account for, but one thing is certain — both the allure and relative value/quality of our local technology ecosystem has diminished. That and many large countries now have their own delivery app, own communicator etc.— so regionalization vs global monopoly.

    4. Those people who moved and got laid off are not going to be able to demand their tech salary in their cheaper COLA location. The only upside they get is if they were able to buy a house in cash.

      The Bay Are will re-attract people with higher salaries as the incentive to work in the office.

      We all say this happen when Yahoo demanded people to come back and work. All these tech companies started providing perks like meals, gyms onsite etc.

      I suspect as a society we’ll emerge from post-pandemic with 4-day work weeks as the bargain between those who desire remote work and bosses wanting people back in the office.

      1. I actually think this take is correct, for the top tier of startups and larger companies. The power dynamics and leadership preferences of the last 20 years did not vanish overnight. But it may take 1-2 years to start to equalize.

  2. Many new companies that were started in 2020-2022 are “remote first”; those people are not going to be relocating to the Bay Area unless they want the “lifestyle”.

    1. Although I wouldn’t want to guess as to the distribution of “remote first” vs. traditional office, there are more and more firms that are “remote first”. As one example, coinbase famously shut down its former San Francisco HQ as it moved to a decentralized, and remote-first, workplace.

      It seems obvious to me that thinly funded startups or recently public companies would want to minimize paying out huge portions of their hard-earned VC or investor funding to entitled fat cat S.F. commercial landlords that don’t have their best interests as going concerns in mind.

      The sooner the shakeout gets over with, the sooner the local developer community can focus their attention on building more housing. Just think of how much worse the vacant office space situation would be if we didn’t have Proposition M’s construction constraints on the books!

  3. So isn’t SF Hybrid Paradise? It is not the cheapest place to live, but it is an exciting beautiful unique place with an unmatched tech/startup culture. This discussion is the perfect place to ask – why not foster a leading edge hybrid environment (not easy to do) with the right architects/RE pros/designers/planners right here. If these empty buildings are shared effectively, there could be more living places needed than we have now.

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