It seems that San Francisco's tech billionaires and their lower-level millionaire minions have finally lost their appetite for outrageously priced homes in the Bay Area. After five years of posting some of the highest YoY pricing growth of any market in the country, single-family home prices in San Francisco and San Mateo counties dropped 2.5% YoY in Q1 2017, making it the the worst performing market of the 100 largest U.S. metropolitan areas, according to an index released earlier today by the Federal Housing Finance Agency. Per Bloomberg:
“We’re seeing signs that the housing market is slowing down,” Ralph McLaughlin, chief economist for Trulia, a unit of Zillow Group Inc., said in a telephone interview. “Homebuyers in the Bay Area have just been stymied by affordability fatigue.”
“Those homeowners who would qualify for conforming loans are the ones that have seen the biggest drops in inventory and the biggest increases in prices over the past five or six years,” McLaughlin said. “It’s no surprise that if there is any cohort impacted by a very frustrating home market, it’s going to be those buyers.”
Of course, taking a step back, the 2.5% decline in 1Q is relatively minor compared to the ~65% rally over the past 5 years that has driven median San Fran home prices to a very bubbly $1.1 million.
Meanwhile, this seems to align well with a survey we pointed out last month which found that a growing number of millennials, 46% in fact, said they could no longer stand to live in the preeminent American 'safe space' of San Francisco primarily because the "rent was just too damn high."
So what say you...temporary blip or are those faint sounds of a massive bubble bursting on our distant shores?