S.F. home buyers have seen biggest savings in U.S. from recent mortgage rate drop, data shows

San Francisco's median monthly payment went from about $9,970 to $8,500, a nation-leading drop of 14.8%. That savings of about $1,500 a month, Redfin analysts noted, means that mortgage holders who bought at the end of 2022 are paying $18,000 less per year than those who took out loans in October.

Following the San Francisco metro at No. 2 was Pittsburgh, with a 12.4% decline from $1,450 to $1,270; then Seattle at a 12.1% drop from $5,130 to $4,510.

Oakland followed with an 11.6% drop in its median monthly home payment, going from $6,160 to $5,440, and rounding out the top five was Detroit, with an 11.3% drop that brought its typical payment from $1,180 to $1,050.

Other California metros were scattered throughout the 49 included in the analysis — San Jose had the sixth largest decline at 10.6%, Sacramento ranked 12th with an 8.7% decline, and Los Angeles was 21st with a 7.7% decline.

The report noted several reasons why San Francisco's decline is outpacing the rest.

First, "It's the most expensive part of the country," the report said. "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, it said, "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."

On top of that, layoffs in the tech industry and a slump in stock prices have sharpened the impact of the economic downturn on tech hubs like the Bay Area and Seattle, the report said, decreasing the demand for new homes and bringing prices down.

But that trend may not last — the declining prices at the end of last year, paired with declining mortgage rates, mean that homebuyers who were just priced out of the market before are becoming interested now.

"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," San Jose Redfin agent Angela Langone said in the report.

However, she added, "Competition has started to ramp up as more buyers are back in the market and new listings remain scarce."

The Redfin analysis compared median monthly housing payments in the 49 most populous metros with sufficient MLS and Freddie Mac data from October 2022 and December 2022. Housing payments were defined as principal, mortgage interest, annual property taxes of 1.25% of the purchase price and annual insurance of 0.5% of the purchase price. "Homebuyers" referred to those with a 30-year fixed-rate mortgage. The analysis did not control for the quality of houses sold.

Danielle Echeverria is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @DanielleEchev