The Bay Area saw the biggest year-over-year declines in home price and sales volume among U.S. metro markets, according to a new Redfin report.
San Francisco and Oakland were the only metros in the country to post a year-over-year decrease in prices, with San Francisco down 6.5 percent and Oakland down 1.5 percent between July 2021 and 2022.
Prices in San Jose were up more than 2 percent, but the South Bay metro had the biggest year-over-year sales volume decline in the U.S. at more than 44 percent, more than double the national median and a far cry from just a few months ago when the region had the most heated bidding wars in the country, according to Redfin. Oakland’s volume was down more than 37 percent and San Francisco was down about 33 percent.
“Sometimes the markets that get the absolute hottest slow down ahead of others,” said Patrick Carlisle, Compass chief data analyst, whose dd showed similar cooling trends. “Santa Clara County got crazy overheated – hot at the tail end of our boom – and for the time being, buyers seemed to have pulled back sooner there. That has also occurred in some of the East Bay markets.”
Carlisle cautioned that “it’s still early days” in the downturn and it remains to be seen if the Bay Area is a bellwether for the rest of the nation.
“It may be that the Bay Area is a step ahead of other regions,” he said via email. “But I don’t know. There are so many volatile factors at work in the economy — locally and nationally — that I really can’t predict the future.”
Home prices were up a median of nearly 8 percent nationwide year-over-year, according to Redfin data. But the country is clearly no longer zipping along like it was in early spring, before interest rates went up, the stock market went down, the war in Ukraine began, and buyers became fearful that the market had peaked.
Almost all the metros on Redfin’s list showed a month-over-month median price decline in July, and home sales fell for the sixth straight month. More than 20 percent of sellers dropped their prices, the highest amount since 2012, when Redfin began tracking that data.
“Some prospective homebuyers were sidelined because they were priced out of the market; others were wary of potential home-value declines in the near future,” according to the report.
Locally and nationwide, the big question is whether the downward trend is just a summer slowdown or the beginning of a sustained bear market. Compass’ Carlisle said he’s not making any big pronouncements until he sees what happens during the fall’s “very active, if relatively short” selling season, which usually begins after Labor Day and peters out as the holidays approach in November. He’ll have his answer pretty soon as September usually records the highest number of new listings in a single month.
“That’s what I’ll be watching,” he said.