By Jennifer Epstein, Paulina Cachero and Prashant Gopal | Bloomberg
The collapse of Silicon Valley Bank has dealt yet another blow to San Francisco’s depressed housing market, dashing agents’ optimism that conditions would finally start to improve.
After months of weak buyer interest, agents began seeing larger crowds at open houses in January and getting multiple offers above asking price on their listings. By early March, though, climbing mortgage rates, plunging stock prices and mushrooming Big Tech layoffs tempered hopes for a spring rebound. Then came last week’s run on the bank that was intricately tied to the region’s massive explosion in wealth.
“Not a single buyer has expressed interest in going out,” Nina Hatvany of Compass said on Saturday, before it was clear that Silicon Valley’s depositors would be able to access all their assets. “Sellers are like, ‘I better sell before it gets worse,’ and buyers are not engaging.”
People across the Bay Area were afraid of what would come next, likening it to the Great Recession of 15 years ago, this time with SVB’s troubles spreading to other banks and potentially tanking startups. “It’s scary,” Hatvany said. “People are worried about whether or not we’ll have another 2008.”
The outlook has improved some in the past few days — and one side effect of the banking industry turmoil has been a welcome cooling in mortgage rates. But buyers, sellers and agents are shaken, and more pessimistic than they were a week ago.
“When people get in a panic mode, it’s bad for consumer spending, particularly the housing market,” said Selma Hepp, chief economist of real estate analytics firm CoreLogic.
The uncertainty SVB’s collapse adds will be especially acute in the Bay Area, where home prices skyrocketed out of reach, only to start slipping last year when borrowing costs nearly doubled and remote-workers left for parts of the country with cheaper housing. The median sale price in the nine-county Bay Area was $1 million in January, down 35% from the peak of $1.54 million in April 2022, according to the California Association of Realtors.