The US housing market is currently experiencing an unprecedented decline in home prices. Recent data from Redfin reveals that properties in some cities are selling for hundreds of thousands of dollars less than they were just a year ago. This decline marks a significant shift in the American real estate landscape following the surge seen during the Covid-19 pandemic.
Among the worst offenders in terms of decline by dollar amount are Oakland and San Francisco in the Bay Area. A researcher suggests that diminishing demand and the looming possibility of a recession are contributing factors to this phenomenon. Other major metros like Austin, Boise, Salt Lake City, Seattle, and Los Angeles have also seen notable declines, with their median home prices dropping by at least $60,000 since April of last year. In San Francisco and Oakland, the median value has decreased by $220,000 and $174,000 respectively.
The numbers unveiled by Redfin have somewhat unexpectedly revealed San Francisco as one of the worst offenders in terms of decline by dollar amount, with homes now costing an average of $220,000 less than they did last year. Crime-ridden Oakland has seen the sharpest decline in home price in terms of percentages, with homes now costing $174,500 less.
According to the report published on May 22, “Pandemic boomtowns and pricey coastal markets are seeing historic home-price declines.” The nationwide median home sale price has dropped nearly $18,000, the most significant drop since January 2012. This decline marks the third month of price decreases in over a decade of increasing prices.
The steepest declines have been recorded in California markets and in towns that experienced increased demand during the pandemic. Austin, for example, has seen a dramatic loss of around $85,000 in home value since April. This decrease amounts to a 15.3% drop in equity over the past year. Boise, Idaho has also seen a significant decrease in home prices, with homes now selling for $80,000 less than they were last year.
Researchers have found that historically expensive areas surrounding San Francisco have the fourth-worst rate for mean sale price, despite their drop being the most pronounced in terms of dollars. Salt Lake City has achieved the distinction of the fifth-most rapid percent decline, with a downtown that has seen a 40% spike in activity since 2020. The data from Redfin indicates that housing demand is now coming back to earth, with an average cost of $60,000 less to purchase a home in Salt Lake City.
Other metropolitan areas that have seen decreases in home prices over the past year include Seattle, Los Angeles, Philadelphia, and Washington, DC. These areas have a higher cost of living compared to the national average.
Higher crime rates and increasing mortgage rates have contributed to the declines seen in these heavily populated areas. These factors have deterred buyers and sellers from engaging in real estate transactions. As a result, new listings have dropped 26.1% year over year, the largest decline on record aside from April 2020 when the pandemic brought the housing market to a standstill.
On the other hand, some areas have seen increases in sales prices despite the national average decline. St. Louis, Cincinnati, and Milwaukee in the Midwest have experienced pronounced increases in sales prices. Allentown in Pennsylvania and Fort Lauderdale in Florida have seen the most significant increases, with mean sale prices rising by 8.9% and 10.7% respectively.
These numbers align with previous data indicating population shifts from historic hubs since the pandemic began, reshaping the real estate landscape.
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