Data Says Big Run-Up in Bay Area Home Prices Slows

The meteoric rise in home prices that has defined Bay Area real estate markets for more than two years is settling down. Select communities continue to post double-digit price increases, but prices in the region as a whole are falling back to earth, according to newly released data.

The most recent S&P/Case-Shiller Home Price Indices delivered the sobering news: The San Francisco metro area, which had shown double-digit annual gains since November 2012, posted an annual return of 9 percent in August. One year earlier the year-over-year appreciation stood at 25.4 percent.

On a month-to-month basis, the pullback was even more pronounced: San Francisco had the largest monthly decline among the nation’s 20 largest metro areas in August — a 0.4 percent drop — and was the only metro area to post a negative monthly return two months in a row. (Prices fell 0.3 percent  from June to July.)

That’s the bad news. The good news is that even as home-price gains slow down, the increases posted over the past two years still make the San Francisco metro area one of the hottest markets for price growth.

The 9 percent annual rise in home prices that seems paltry when judged by past performance is nonetheless the third-highest gain among Case-Shiller’s top-20 markets.

Nationally, home prices posted an annual gain of 5.1 percent in August, and on a monthly basis they rose 0.2 percent — not much of a contrast to the Bay Area’s recent cooling.

And a look at local sales data shows that year-over-year comparisons of median single-family home prices varied widely in Pacific Union’s Bay Area regions, according to MLS statistics.
Annual-home price gains were up a solid 20 percent in our Silicon Valley region in August, and up 15 percent in our Contra Costa County region and 13 percent in the East Bay.

The annual declines in August were in our Sonoma Valley region, down 3 percent; Napa County, down 2 percent; and the Mid-Peninsula subregion, down 1 percent.

Lastly, if you’re wondering why Case-Shiller is just now reporting home-price data for August when other real estate researchers are preparing October results, well, that’s the way the index operates. The data is among the most highly regarded of all housing reports, known for its breadth of research and the accuracy of its conclusions, but it will never win a race for fast results.




(Image: Flickr/401(K) 2012)