Although home prices have skyrocketed in the US, there are a few cities where costs have come down and mortgage prices have fallen in recent months.
But many are crime-ridden areas — like San Francisco and Los Angeles — that are already tackling a plethora of social issues that are believed to be driving homeowner brain drain and, with it, reduced demand in the market.
House prices have fallen in 20 major American cities in the past year, four of them in California, according to a new study.
The median price for single-family homes rose four percent in the fourth quarter from the same period last year. According to the National Association of Realtors, the average single-family home now costs about $378,700.
Only 20 of the top 186 markets tracked by NAR saw declines in the fourth quarter, but experts predict more are to come.
The West had the lowest growth in the country at just 2.6 percent. Los Angeles saw prices fall just 1.3 percent, but San Francisco saw the biggest drop in the country, down 6.1 percent, while neighboring country San Jose saw the biggest drop, down 5.8 percent.
Only 20 of the top 186 markets tracked by NAR saw single-family home prices fall in the fourth quarter, but experts predict more are to come
“Some markets could see double-digit price declines, particularly some of the more expensive parts of the country, which have also seen weaker employment and more frequent outflows of residents to other areas,” said Lawrence Yun, NAR’s chief economist.
According to Yun, the slowdown represents a break with markets that have seen a massive price boom during the pandemic.
“A slowdown in house prices is underway and welcomed, especially as the typical house price has risen 42% over the past three years,” Yun said, noting that these cost increases have far outpaced wage increases and consumer price inflation since 2019.
For example, San Jose had one of the biggest declines but is still the most expensive place to buy a home in the country at an average price of $1,577,500. Prices peaked in early 2022 at $1.9 million.
Los Angeles, San Francisco and San Jose — all of which have had major problems with homelessness and crime in recent years — are three of the markets that have seen slumps. Nearby Anaheim also posted a 1.6 percent drop.
Other markets that have seen prices drop include Boulder, Colorado, down 2.0 percent; Austin Texas at 1.3 percent; and Boise, Idaho at 3.4 percent.
Bay Area homes are selling below their list price for the first time in 10 years, according to the San Jose Mercury News.
Redfin chief economist Daryl Fairweather told Mercury News that this represents the larger exodus from the region, fueled by remote work, particularly in the tech sector.
“Perhaps we’ll see this new normal where the San Francisco Bay Area looks more like the rest of the country,” she said.
Homes like this one in San Francisco saw the largest price declines in the country
Austin, Texas is one of only 20 cities where single-family home prices have fallen
The western United States as a whole had the lowest growth in the country at just 2.6 percent
But according to NAR, massive tax cuts elsewhere are driving the exodus, especially as California Gov. Gavin Newsom increases taxes on the wealthy.
In fact, all falling home price markets are led by Democratic mayors, while the California and Colorado markets are led by Dem mayors and governors.
An article published by the Los Angeles Times in early February found that hordes of residents are moving to northern Nevada, causing problems with sedentary residents who see rising prices and traffic problems.
The former Californians are looking for the “perfect elixir — a hangover-free California bender.”
California residents and businesses began relocating to the northern Nevada region back in 2014 when Tesla began building a battery pack factory outside of Reno.
The Tahoe-Reno Industrial Center has grown to be the largest industrial center in the world, spanning 166 square miles.
The center is so sprawling that it’s roughly the size of New Orleans, Louisiana.
Business relocation and the COVID-19 pandemic spurred a new wave of Californians who headed east and recreated their California lifestyle as a “technology hub with comfortable communities, economic growth, and mountain views—without the hassles of California.”
Overall, single-family home prices are up four percent nationwide, with the highest gains in the South at 5.3 percent. Many people have moved to Florida since the pandemic began.
In fact, seven of the top 10 cities in terms of rising prices were in Florida and the Carolinas, with Sarasota posting the second-largest rise of 19.5 percent.
Even the rich have trouble charging top-notch prices for their homes, as evidenced by the recent sale of superstar actor Mark Wahlberg.
Wahlberg’s move to Nevada, which borders California, comes after he put his amazing 12-bedroom, 20-bathroom Beverly Hills mansion on the market for $87.5 million in April last year.
Many have cited California Gov. Gavin Newsom’s tax policies as a reason to leave the state
Actor Mark Wahlberg has sold his longtime Los Angeles home for just over $55 million, over $30 million below the original asking price, as he departs in favor of Nevada to eventually build “Hollywood 2.0” in Sin City
The sale took nearly a year, but on February 17, it was announced that the property had been purchased by an unidentified buyer for just over $55 million.
As people pack it up and head for greener pastures, even more could flee if progressive Democratic Rep. Alex Lee recently introduced a bill that would impose an additional annual tax on residents – past and present – with a worldwide net worth of over $1 billion of 1.5 percent would be imposed. from January 2024.
The tax threshold would fall as early as 2026. Those with worldwide net worth greater than $50 million would have to pay an annual wealth tax of 1 percent, while billionaires would still be taxed at 1.5 percent.
Global wealth includes various possessions such as agricultural assets, art and other collectibles, and hedge fund stocks and interest.
California already taxes the wealthy more than most states, with the top 1 percent of income earners accounting for about half of the state’s income tax revenue.
Homeless people are seen on December 20, 2022 in Los Angeles, California
Nicole Ginsberg, 51, and her dog Lilly Day wait to be offered accommodation while living on 3rd Street in Venice on January 13, 2023
Eric Freeman, 59, cleans the sidewalk outside his tent during a break from a rainstorm in Skid Row, where he has been homeless on and off for the past 30 years in downtown Los Angeles
According to Forbes’ 2022 World’s Billionaires list, California is home to 186 billionaires, up from 189 last year, but far more than any other state.
In 2020, California had the most millionaire households in the US, with 1.14 million households having one million or more in investable assets.
While some are fleeing Los Angeles because of tax increases, others are concerned that homelessness, poverty and crime are also on the rise.
Homelessness, and particularly homelessness with the added facet of severe drug addiction, is currently a significant problem in many major metropolitan areas in the United States.
Especially in Los Angeles and San Francisco, where drug-addicted homeless populations have engulfed entire neighborhoods, people find it difficult to conduct business and parents feel comfortable when their children walk to school.
Late last year, members of the Los Angeles City Council voted to prevent homeless people from pitching their tents within 500 feet of schools in the city.
The National Association of Realtors reported earlier this month that existing US home sales totaled 5.03 million last year, down 17.8 percent from 2021. This is the weakest year for home sales since 2014 and the largest annual decline since 2008 during the housing crisis of the late 2000s.
The interest rate on a 15-year mortgage, popular among those refinancing their homes, rose to 5.51 percent this week from 5.25 percent last week. A year ago it was 3.15 percent.