Bay Watch – Home Values

Bay Watch: A Weekly Look into the Bay Area Economy

December 1, 2022

The Bay Area continues to lead the nation in home values.

The Nine-County Bay Area – comprised of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma counties, and 101 municipalities – is home to the most expensive housing market in the country. The combination of high demand and limited inventory due to having one of the lowest per capita housing production rates in the country continues to contribute to the housing affordability crisis in the region. Even though homes in the Bay Area continue to sell for record setting levels, the housing market continues to shift away from the buying frenzy experienced during the pandemic. According to the California Association of Realtors, home sales in the Bay Area declined 37.3 percent in October 2022 when compared to the same month last year. As mortgage rates increase (currently 7% in California), home buyers and sellers alike are becoming more discouraged.



The San Francisco metro, which comprises Alameda, Contra Costa, San Francisco, San Mateo, and Marin counties, and San Jose metro areas, which comprises of Santa Clara and San Benito counties, continue to have the highest home values in the nation, followed by Los Angeles, San Diego, and Seattle.



Home values in metro areas across the U.S. have grown at a significantly higher rate over the last year when compared to San Jose and San Francisco metro areas, which have grown at 6.3% and 3.4%, which are the lowest across comparable metro areas. Metro areas located in Florida – including Miami, Orlando, and Tampa – have experienced the largest annual growth in home values from the previous year.

Taking a deeper look at Bay Area cities and counties

In May 2022, Bay Area home values reached their peak during the pandemic as interest rates remained low and buyers would offer hundreds of thousands over the asking price. Since then, there has been a cooling off across almost every county, except Sonoma, which has experienced steady increases since October 2021. San Francisco County was the only county to have an annual decline in home prices.



Taking a more granular look at cities in the Bay Area illustrates an interesting picture. While home values have increased from last year, some cities have started to see a decline in home prices.



The biggest declines occurred in cities on the Peninsula and in the South Bay. San Francisco, Castro Valley, and Palo Alto saw the greatest decline in their home values from the pandemic peak in May. San Francisco’s home values have dropped 7.6% from May, down from $1.58 million. San Francisco, Palo Alto, San Jose, and other core cities have been greatly impacted by the COVID-19 pandemic as many workers have been working remotely and are not yet back in the office regularly.