(NEXSTAR) — Several U.S. cities where home prices skyrocketed due to an influx of new residents during the pandemic are now seeing prices drop quickly — and many of them are here in California. Real estate experts at Redfin looked at year-over-year data back in February and then again in October to find where the price per square foot dropped the most during that time period.
These are the California metros where price growth is decelerating fastest, Redfin says:
|U.S. metro||YoY change in Feb. 22||YoY change in Oct. 22||Drop in YoY price February-October|
|San Jose, Calif.||20.4%||-1.6%||-22 ppts|
|Oakland, Calif.||19.3%||-0.6%||-20 ppts|
|Sacramento, Calif.||20.8%||1.2%||-20 ppts|
|Riverside, Calif.||25.6%||6.8%||-19 ppts|
While San Jose is the California area with the most dramatic slowing in home price year-over-year, it’s only third on the overall list, which includes cities like Phoenix, Las Vegas and Boise, Idaho. The city with the steepest drop in home prices is Austin, Texas.
As Redfin explains, these U.S. metros saw huge population growths as remote work became more common as a result of the pandemic. For the first time, perhaps ever, many American workers had the option to work virtually from less expensive cities than where their employers were located.
And although many corporations have begun pulling workers back into the office, Pew Research data from February showed about six in 10 U.S. workers who could work remotely were, at least most of the time.
But housing data indicates that a variety of factors are slowing things down.
“The forces slowing the housing market, such as high mortgage rates, are having an outsized impact on places like Austin and Boise that saw home prices skyrocket over the last few years,” said Redfin Senior Economist Sheharyar Bokhari. “Home prices can only rise by double digits for so long before the growth becomes unsustainable. High rates and stumbling tech stocks are making it unsustainable quite quickly, especially in destinations popular with tech workers. Plus, many of the out-of-towners with big budgets who wanted to move into those places already have.”
These trends have been in process for some time.
An October study by home insurance website QuoteWizard found that while home prices rose 1% nationally June-October, the average price of a home in California dropped $12,205 in the same amount of time — the most dramatic decline in any state.
As of October 2022, the median home sale price in California was $754,000, per Redfin data. Of available homes, there were about 95,374, a 1.6% increase in supply year-over-year. While 33.4% of homes sold above list price YoY, this was a -26 point decrease from the previous year. Additionally, there was a 17.5-point increase in number of homes with price drops YoY.