California's housing market is collapsing, per Newsweek.
Recent data reveals a significant drop in home prices across parts of California, which had been among the most overvalued areas in the country until recently.
Affected by the same price correction that impacted the U.S. housing market from late summer 2022 to spring 2023, California's prices have experienced a slight rebound with persistently low inventory.
The California Association of Realtors (CAR) reports that the median sale price of an existing single-family home in the state was $840,360 in October, down from $843,360 in September but up 5.3% compared to a year before.
While existing home sales in October saw a modest 0.3% increase, the number was 11.9% lower than in October 2022 due to the hindrance of high mortgage rates.
Beyond San Francisco, other California cities such as Dublin, Truckee, Palo Alto, Pleasanton, Alameda, Oakland, San Mateo, Berkeley, Albany, San Anselmo, Willits, Mountain View, Fremont, Santa Cruz, Livermore, San Carlos, and Castro Valley have also witnessed declines in home prices, according to a recent report by GOBankingRates.
In San Francisco, prices were down by 13.04% year-on-year, while Palo Alto and Fremont experienced drops of 12.80% and 10.60%, respectively. Santa Cruz saw a 10.44% year-on-year decrease.
A Zillow listing for a home in Lake Tahoe, at the California-Nevada border, showed a $3.5 million price reduction after 477 days on the market. Another property in Carmel, California, experienced a $2.55 million price reduction after 245 days on the market.
While the future of the California housing market is uncertain, the state may follow the national trend of modest growth forecasted by analysts, including Goldman Sachs, especially if low inventory persists. The recent announcement by the Federal Reserve to shift towards cutting interest rates may contribute to a slow climb in prices.
