Zombie homes in the Bay Area fell from around 3,000 to around 350 after 2015, Fox 13 reports, but San Francisco’s zombie homes are likely to never go away. Local real estate professionals note several problems standing in the way of fixing the problem, including prices not being lowered for vacant properties. Additionally, a home-building boom is drawing buyers to new construction. According to CoreLogic, the nine-county San Francisco Bay Area saw the purchase of 7,404 new and existing houses and condos in July 2019.
"People coming into the market are saying, 'To heck with buying a used home, I'd rather buy a new home and have everything brand new in it,'" Michael Madson, Lipply Real Estate, told Fox 13.
Madson adds that homeowners have little defense against neighborhood zombies, the banks who own them, and local code enforcement.
"You can call the county and report violations, but after a while the county stops talking to you about it," said Madson.
As new owners are moving to new construction, supply is dwindling. San Francisco had the lowest supply of homes in June at 1.7 months, according to CoreLogic.
Affordability issues, trade tensions and diminishing foreign demand have capped price growth in San Francisco for now, and the city is one of the most overvalued cities in the country, with an index level of 1.15. The UBS Chief Investment Office’s Global Real Estate Bubble Index 2019 notes that real prices increased by 85% between 2012 and 2018 in the city, fueled by booming technology companies and a large amount of IPO money making its way into real estate.
“The weakness in the Bay Area’s housing market is exacerbated by diminishing foreign demand and the historic low affordability for the working middle class,” UBS states. “With the highest number of housing permits since the late 1980s, the supply shortage may start to ease and potentially accelerate the price correction.”