Bay Area Real Estate Index Shows Downward Trend

 

                                    

The S&P CoreLogic Case-Shiller Index for single-family home values within the San Francisco Metropolitan Area – which includes the East Bay, North Bay and Peninsula – ticked down another 1.8 percent this past December and is now 4.2 percent lower than at the end of 2021, representing the largest year-over-year drop for the index over a decade.  In fact, the “San Francisco” index has actually dropped over 16 percent since last May and the decline is accelerating, none of which should catch any plugged-in readers, other than the most obstinate, by surprise.

                                

At a more granular level, the index for the least expensive third of the Bay Area market ticked down 1.8 percent in December for a year-over-year decline of 4.7 percent; the index for the middle tier of the market ticked down 1.4 percent for a year-over-year drop of 3.9 percent; and the index for the top third of the market ticked down 2.0 percent for a year-over-year drop of 3.6 percent, as we projected.

The index for Bay Area condo values, which remains a leading indicator for the market as a whole, ticked down another 1.7 percent in December and was 4.6 percent lower than at the same time last year, having dropped 11 percent over the past seven months, versus year-over-year gains of 5.0 percent, 4.4 percent and 4.8 percent in Los Angeles, Chicago and New York, respectively.

At the same time, the national home price index only slipped 0.8 percent in December and remains “5.8 percent higher than at the same time last year,” with Miami, which remains 15.9 percent higher than at the same time last year, continuing to lead the way with respect to exuberantly indexed home price gains, followed by Tampa (up 13.9 percent) and Atlanta (up 10.4 percent), and the indexes for San Francisco and Seattle (down 1.8 percent) the only two major metropolitan areas having recorded year-over-year declines, but with an understated “cooling” across the board.

Bay Area Median Rent Price Shows Slight Decrease

San Francisco and the rest of the Bay Area saw apartment rents fall in January at a higher rate than the national average, another sign of a slowing Bay Area economy that could be hurt further by mass tech layoffs.

San Francisco median rents fell 1.1% to $2,174 per month compared to December, one of the biggest drops in the country. Metro area rents are down 5% compared to March 2020 when the pandemic started, making San Francisco and San Jose the only two metro areas with more than 1 million people that have rents that are below pre-pandemic levels.

National rents fell for the fifth straight month, with prices down 0.3% compared to December. Prices are still up 3.3% compared to January 2022, but growth has slowed in the past two years. Two-thirds of the 100 largest U.S. cities saw rents drop month over month.

A wave of layoffs in tech is expected to reduce demand for apartments in the Bay Area. “Softness in the tech industry is likely to prevent a strong rebound in Bay Area rents,” Apartment List said.

Nationally, rents are expected to climb again during the busier spring and summer months.

Bay Area home values have also declined in the last 6 months as mortgage rates have shot up, according to Zillow.