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Have California home prices hit bottom?

”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.

Buzz: The past year’s swift fall in California home prices has slowed, if not reversed, according to recent valuation reports.

Source: My trusty spreadsheet took a California-centric look at home-price trends from Case-Shiller (through March), the California Association of Realtors (through April), and the Federal Housing Finance Agency (for the first quarter).


The Case-Shiller analysis, based on gains from individual home sales, showed two-month price gains in three big California markets. Realtors, who track the overall median sales price, found similar increases statewide.

But the FHFA indexes – which track sales plus appraisal information on refinanced properties – didn’t reflect any early 2023 valuation rebound.


The modest seasonal home-shopping rush of early 2023 has tamed price cuts that followed sharp mortgage-rate hikes than began last spring. Consider what these indexes tell us …

Case-Shiller: San Francisco pricing rose 4.1% in February and March, the best gain among 20 U.S. cities tracked. Bay Area values are still 14% off last year’s peak, but they’re up 26% since February 2020, just before the pandemic struck the economy.

San Diego was No. 2 in this ranking, up 4% in 2 months, and now 8% off last year’s peak – but up 48% in the pandemic era. And values in Los Angeles and Orange counties were up 2.6% in the two months, No. 4, and are now 6% off last year’s peak but up 37% in the pandemic era.

Realtors: Statewide prices rose a combined 11% in March and April but remain 9.4% off last year’s peak yet still up 41% in the pandemic era.

Bay Area prices rose 19% in two months but are still 17% off last year’s peak and are still up 37% in the pandemic era. And in six-county Southern California, prices rose 5.4% in two months but are 7% off last year’s peak and are still up 35% in the pandemic era.

FHFA: Statewide values dipped 0.5% in 2023’s first quarter after dropping 0.6% in 2022’s third quarter and 2.3% in the fourth quarter. That adds up to a 3.5% drop off last year’s peak – but still 34% above the end of 2019.

Bottom line

Despite the past year’s price cuts, the pandemic era’s surging valuations made a mess of most Californians’ house-hunting math.

So homes sell at a historically slow pace. Purchases of single-family houses in April were slower than all but 3% of the months in Realtor data dating to 1990.

Blame sadly low affordability. The typical California homebuyer needs an annual income of $188,400 to qualify, and that’s up 19% in a year, say Realtor stats for 2023’s first quarter.

That means only 20% of buyers in the state in early 2023 could successfully but a house. Worse, mortgage rates have gotten pricier this spring. Freddie Mac’s average rates went from 6.1% in early February – yes, down from 7.1% in November – back up to 6.6% in late May.

Home prices have also been supported by limited inventory for house hunters to choose from. Can that supply shortfall continue to prop up values?

And the overall economy has been solid, too. Well, until California layoffs jumped to 27-month high in March.

The pricing puzzle was summed up by Craig Lazzara, a managing director for Standard & Poor’s that helps produce the Case-Shiller indexes. Referring to national pricing trends that mirror California, he said “two months of increasing prices do not a definitive recovery make.”

Then he added, “the decline in home prices that began in June 2022 may have come to an end.  That said, the challenges posed by current mortgage rates and the continuing possibility of economic weakness are likely to remain a headwind for housing prices for at least the next several months.”

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at

Source: Orange County Register

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