But low-tier prices of single-family houses in the vast New York City metro explode by 15%, powered by fleeing Manhattanites?
By Wolf Richter for WOLF STREET.
The headlines are everywhere: The housing market has gone nuts with silly bidding wars and ludicrous price increases. Record low interest rates last year and $3 trillion of the Fed’s miracle moolah triggered that phenomenon, along with people leaving some big expensive cities for the suburbs, outer areas, and distant places, whose prices soared under the influx, while many leavers haven’t yet put their vacant old homes on the market, hoping to ride up the price surge, thereby constraining inventory for sale. But not all things are equal, as we’ll see with condos and houses by price tiers in the San Francisco Bay Area, Los Angeles, and the New York City metro, based on today’s S&P CoreLogic Case-Shiller Home Price Index.
San Francisco Bay Area condo prices sag.
Condo prices in the five-county San Francisco Bay Area dropped 1.2% in January from December, the eighth month in a row of month-to-month declines. The index is down 1.5% from January last year, down 5.1% from the peak in May 2020, and roughly back where it had first been in February 2018:
The Case-Shiller Index for “San Francisco” covers the counties of San Francisco, San Mateo (northern part of Silicon Valley), Alameda and Contra Costa (East Bay), and Marin (North Bay). It doesn’t cover the southern part of Silicon Valley, including San Jose, and the largest portions of the North Bay (Wine Country counties of Sonoma and Napa) and Solano County.
In San Francisco county, condos are the majority of the market. In the other counties, houses are the majority.
Quite a few people have moved from San Francisco to the outer regions of the Bay Area. The move to Marin County cancels out because it is included in the index. But people have also moved to the other counties that are not included in the index, such as Sonoma County, whose housing market is red hot in part due to the influx of people from San Francisco.
Prices of all single-family houses in the five-county San Francisco Bay Area, ticked up 0.2% in January from December and rose 9.5% year-over-year. By price tiers:
- Low-tier prices (black line) fell 0.4% in January from December, the first month-to-month decline since 2019, after having surged the most in 2020. The January drop reduced the year-over-year gain to 10.8% (from 11.4% in December)
- High-tier prices remained flat with December, and were up 7.9% year-over-year.
- Mid-tier prices rose 0.4% in January from December and were up 10.8% year-over-year.
Los Angeles condo prices left behind by house prices.
Prices of single-family houses in the Los Angeles metro rose 1.0% in January from December and 10.8% from January 2020. By price tiers, different trajectories become apparent:
Low-tier house prices show by far the largest surges during booms and by far the largest plunges during busts, having collapsed by 56% from the peak of Housing Bubble 1 to the bottom of the Housing Bust. Since then, they have skyrocketed 163%, nearly quadrupling since January 2000. In January, low-tier prices surged 1.4% from December and 10.4% year-over-year.
High-tier house prices are the least volatile. They have “not even tripled” (this sounds nuts) since January 2000. During the Housing Bust, they plunged only “33%” and since then have risen “only” 84%. In January, they rose 0.9% from December and 8.7% from a year ago.
Condo prices rose 0.6% from the prior month and 5.2% year-over-year, about half the rate of the year-over-year price gains for mid-tier and low-tier houses.
New York City metro condo prices still range-bound.
The Case-Shiller Index for New York City covers New York City and numerous counties in the states of New York, New Jersey, and Connecticut. This is a vast and diverse market.
Condo prices in the area rose by 0.5% in January from December and are up 1.7% year-over-year, remaining in the same narrow range since January 2018, speckled with some bigger moves up and down:
But prices of low-tier houses in the New York metro in January jumped 1.4% from December and 14.9% year-over-year. This includes houses in lower-cost areas of the market where Manhattan leavers have scurried to, thereby driving up prices.
Mid-tier house prices jumped 11.2% year-over-year. High-tier house prices jumped 11.3%; it is just over the past few months that high-tier prices began to exceed the peak of Housing Bubble 1. But condos did not participate in the price surges that houses reveled in.
The chart is on the same scale as the equivalent charts for Los Angeles and San Francisco, to show just how much faster prices have surged over the years in the two California metros than in the New York City metro. But since 2020, house prices in the New York metro are on fire across the board, though condos are not:
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