Home Prices Drop As Housing Market Cools In NorCal

NORTHERN CALIFORNIA — As mortgage rates rise and home sales fall, home prices in Northern California and across the country have begun to fall.

According to a recent report by Black Knight, a software, data and analytics company, house prices fell by as much as 0.77 percent from June to July 2022. That was the biggest monthly drop since January 2011.

“After 31 consecutive months of growth, home prices are down 0.77 percent in July,” said Ben Graboske, Black Knight president. “Annual home price growth was still over 14 percent, but in a market that is characterized by as much volatility and rapid change as today, such backward-looking metrics can be misleading as they can obscure more timely, pressing realities.”

The company’s house price data has been pointing to a cooling real estate market for several months, Graboske said.

“Prices rose 28 times their normal monthly rate in January before slowing to five times the average in February as interest rates began to rise,” Graboske said. “Even May was about twice normal before growth in June was 70 percent below the long-term average. And all the while, annual appreciation seemed to continue to be historically strong, posting double-digit month-on-month growth. Without timely, granular data, market-moving trends don’t become apparent until they’re right in front of you — like a sudden shift in the biggest one-month drop in house prices in more than a decade.

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More than 85 percent of the 50 largest U.S. markets have seen prices surpass their highs through July, with a third falling more than 1 percent and about 1 in 10 falling 4 percent or more, the report said. As a result, some homeowners are losing equity — particularly those in major California metro areas.

“Some of the nation’s stockiest markets have seen significant declines, particularly in key West Coast metro areas,” Graboske said.

“From April to July, San Jose lost 20 percent of its tapped equity,” he said. “Seattle followed, losing 18 percent of vulnerable equity in the same three-month period. Likewise, San Diego (-14 percent), San Francisco (-14 percent), and Los Angeles (-10 percent) have all posted double-digit declines since April.”

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Home sales are down nearly 18 percent since January 2022, according to the US Census Bureau. However, some areas have cooled more than others.

According to a recent study by SmartAsset, three California metro areas are among the housing markets that are “cooling the most.”

SmartAsset, a financial advisory resource, analyzed the top 100 metro areas to identify the housing markets that have slowed the most. The company compared 2021 and 2022 dates using eight metrics, broken down into two categories: price reduction and reduced demand.

Boise, Idaho has cooled the fastest according to the report. However, three California metro areas, including the San Jose-Sunnyvale-Santa Clara region, are among the top 10 places where the housing market has cooled the most.

“Homes are staying on the market longer in these areas compared to a year ago – almost twice as long,” the report said. “Additionally, in all three areas, the number of monthly homes sold decreased by over 33 percent from August 2021 to August 2022.”

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The San Jose-Sunnyvale-Santa Clara metro area ranked fourth, according to the report. The San Diego-Chula Vista-Carlsbad metro area was ranked eighth and the Stockton metro area was 10th.

“San Jose-Sunnyvale-Santa Clara, California is in the top 10 for both major discounts and lower demand,” the report reads. “Homes have been on the market for about 19 days (8th highest time), up 90 percent in exactly one year (18th highest time). Also, the number of homes sold is down 43.17 percent to 26.81 percent of current listings have a price drop.”

These are the top 10 real estate markets cooling the most, according to the report:

  1. Boise, Idaho
  2. Austin Round Rock Georgetown, Texas
  3. Phoenix-Mesa-Chandler, Arizona
  4. San Jose-Sunnyvale-Santa Clara, California
  5. Las Vegas Henderson Paradise, Nevada
  6. Salt Lake City, Utah
  7. North Port Sarasota Bradenton, Florida
  8. San Diego-Chula Vista-Carlsbad, California
  9. Provo Orem, Utah
  10. Stockton, California

Read SmartAsset’s full report.

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