It was only a matter of time before the hot housing market started to cool. At some point, home prices were going to rise above what people could afford. An increase in interest rates worsened this. Then came the race for which markets would start to fall first and which would fall the fastest. (Click here for the cities where home values rose the most since 2000.)
The just released S&P Case-Shiller home price index for November shows that, year over year, home prices rose 7.7% nationwide. That is down from a pace of nearly 20% early last year. Craig J. Lazzara, managing director at S&P DJI, commented, “November 2022 marked the fifth consecutive month of declining home prices in the U.S.” Prices fell 0.6% from October, another sign of the trend.
The market that posted the worst results in November was San Francisco, where prices dropped 1.6% year over year. In general, the west coast did poorly. Seattle prices were up only 1.5%, and prices in Los Angeles rose only 4.4%
San Francisco’s housing market has several problems. One is that greater San Francisco has the highest median home prices in the country. Median home prices in San Jose are over $1 million. San Francisco’s are nearly as high.
Tens of thousands of people left west coast cities and moved inland. They could do so because they were allowed to work from home. Markets such as Salt Lake City and Boise had much lower home prices and a “better” quality of living.
San Francisco was a mecca for decades. It is located in one of the most beautiful places in the world. The rise in the tech industry made many people who lived there wealthy, but some of that charm has worn off. Maybe this is because prices were so high they were bound to fall.
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