As mortgages soar, Bay Area home prices fall.
Prices across the Bay Area fell faster than the national average from May to August, with values in Silicon Valley plunging up to 7 percent, the San Francisco Chronicle reported, citing a Zillow study.
Typical home values dropped 3 percent in Greater San Francisco, including Alameda, Contra Costa, San Francisco, San Mateo and Marin counties.
But the fall was greater in metro San Jose, including Santa Clara and San Benito counties, with typical home values plunging 6 percent.
Nationwide home values declined 2 percent during the same period.
The average 30-year fixed mortgage rate has doubled since the beginning of the year to 7 percent for the week of Oct. 13. The increase has stopped many potential buyers in their tracks, real estate experts say.
“This is all about affordability,” Matt Kreamer, a data spokesman for Zillow, told the Chronicle. “The Bay Area is the most expensive housing market in the country, and as mortgage rates have jumped, so has the cost of a monthly payment for someone trying to buy a house.”
A 20-percent down on a $1.5 million home early this year could result in a house payment at less than $6,500 a month when rates were around 3 percent, Kreamer said. With rates now at 7 percent, that monthly payment has jumped to $9,500 a month, which is “clearly pricing buyers out of the market.”
Also, new inventory has slowed because potential sellers don’t want to give up their low-rate mortgages.
Home values from May to August in the 54 Bay Area cities with 30,000 or more residents show the biggest declines in cities on the Peninsula and in the South Bay.
Palo Alto reported the Bay Area’s largest drop in typical home values of 7.1 percent, from $3.88 million in May to $3.61 million in August. Santa Clara followed closely behind at 6.8 percent, going from $1.73 million to $1.61 million. Los Altos home values fell 6.7 percent from $4.37 million to $4.08 million, according to Zillow.
Across the Bay, typical home prices during the same period fell 5 percent in San Leandro to $895,000, 4.4 percent in Castro Valley to $1.25 million, 4.3 percent in Union City to $1.38 million and 4.2 percent in Hayward to $915,000.
San Pablo was the only city in Contra Costa County in the top 10, with a decline of 6.7 percent in home values, from $590,000 in May to a little over $550,000 in August.
Just three cities in the analysis saw increases from May to August. In the North Bay, Novato saw the biggest increase in the region, with home values rising 2.2 percent and San Rafael went up 1.1 percent. In the East Bay, Antioch had a slight bump of 0.2 percent.
— Dana Bartholomew
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