San Francisco Bay Area, Southern California Home Sales Crater, Prices Begin to Drop. California Pending Sales Collapse 40%

The first year-over-year price declines crop up as the crazy California housing market “normalizes” amid holy-moly mortgage rates.

By Wolf Richter for WOLF STREET.

Pending sales in California plunged by 40.6% in June from a year ago, according to the California Association of Realtors (C.A.R.). Listings that went pending in June are expected to turn into closed sales in July, or at least many of them, and given the 40% plunge in pending sales in June, closed sales in July are going to be interesting. The discussion below is about closed sales in June.

Closed sales of single-family houses in California plunged by 8.4% in June from May and by 20.9% from a year ago. Closed sales of condos plunged by 27.0% from a year ago. Beyond the three lockdown months of 2020, June sales were the lowest since 2008.

All of the five regions had double-digit year-over-year sales declines – and in three of them, sales plunged by over 25%: Southern California, San Francisco Bay Area, and Inland Empire.

Of all the counties tracked by the California Association of Realtors, 48 experienced double-digit declines in closed sales. The counties with the biggest year-over-year plunges in closed sales: San Benito (-48.6%), Siskiyou (-45.2%), Orange (-36.1%), and Santa Cruz (-36.1%).

Here are the two most populous regions in California, the six counties of Southern California and the five big counties of the nine-county San Francisco Bay Area:

Sales in June, % Change fr. year ago Houses % YoY Condos % YoY
California Sales -20.9% -27.0%
Southern California counties -27.1% -24.8%
Los Angeles -20.6% -18.1%
Orange -36.1% -28.9%
Riverside -27.4% -24.5%
San Bernardino -27.5% -3.3%
San Diego -30.5% -32.0%
Ventura -22.6% -3.4%
San Francisco Bay Area counties -26.8% -33.4%
San Francisco -21.3% -32.7%
San Mateo (Silicon Valley) -31.3% -33.1%
Santa Clara (Silicon Valley) -31.4% -37.9%
Alameda -21.0% -21.8%
Contra Costa -31.0% -38.5%


Unsold inventory is suddenly coming out of the woodwork.

  • Active listing spiked by 64% year-over-year, to the highest since late 2019, and this occurred even as sales plunged:
    • San Francisco Bay Area: +61%
    • Southern California: +65%
    • Central Valley: 79%
  • Supply rose to 2.5 months, also the highest since late 2019, up from 1.7 months a year ago.
  • New listings jumped to 26,880 homes, the highest in nearly three years.

Crazy prices begin to fall.

Listings with price cuts rose to a share of 35.5% of total listings, the highest since 2019, with the median price cut being 5.3%.

Prices had gone crazy over the past few years. But over the past few months, county by county, prices began to dip from those ridiculous spikes. So these are deals that closed in June, but were made previously. Pending sales in June – the 40% year-over-year collapse – indicate that month-to-month dips in prices wasn’t a blip and are likely to become a trend.

Median prices are very volatile, they jump up and down, and can be skewed by changes in the mix of houses that sold, so take median prices with a good dose of caution.

In most counties in California, prices are still higher year-over-year. The month-to-month drops are just the very beginning.

But the first year-over-year price declines are cropping up in the San Francisco Bay Area, both in single-family houses and condos.

In San Francisco, the median price of single-family houses peaked in March at $2.06 million. It then dropped for three months in a row and in June reached $1.9 million, back where it had first been in March 2021. Condo prices were flat year-over-year.

In San Mateo County (norther part of Silicon Valley), the median price of single-family houses hit a crazy $2.4 million in April, and then dropped two months in a row, to $2.155 million, below June 2021 levels. Condo prices also dropped into the red year-over-year.

Median Prices, % change from year ago, June Houses % YoY Condos % YoY
California Sales 5.4% 10.0%
San Francisco Bay Area 3.7% 5.5%
San Francisco -2.6% 0.0%
San Mateo (Silicon Valley) -5.3% -0.7%
Santa Clara (Silicon Valley) 4.0% 5.5%
Alameda 9.2% 6.7%
Contra Costa -1.3% 13.6%
Southern California 8.4% 15.1%
Los Angeles 8.1% 15.0%
Orange 11.2% 15.8%
Riverside 12.2% 22.7%
San Bernardino 12.6% 13.7%
San Diego 9.8% 15.1%
Ventura 10.7% 11.8%


No one knows what “normalize” means in the crazy California housing market, where the bottom has now fallen out of sales, but this market will “normalize further,” according to the C.A.R.

“With inflation remaining high and interest rates expected to climb further in the coming months, the market will normalize further in the second half of the year with softer sales and more moderate price growth,” said the C.A.R. report.

One thing is for sure: the magic is coming out of the housing market, as holy-moly mortgage rates begin to bite – and they bite a lot in California because prices are too dang high.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  198 comments for “San Francisco Bay Area, Southern California Home Sales Crater, Prices Begin to Drop. California Pending Sales Collapse 40%

  1. BEAST says:

    “Normalizing”. LOL

    • michael says:

      Here’s a transcript from the recent NARs meeting: “Crash? too negative. Drop? that’s just like crash. Correct? That implies the market was wrong to begin with. How about Normalize? perfect! This can be used in a sentence like ‘normalizing to pre-pandemic levels’ even if we experience 25% price drops! “

      • Phoenix_Ikki says:

        haha in that same fashion, I guess WeWork or Enron also had to normalized as well

        • SS says:

          Meanwhile stocks ralied again today and 10 year yield has not moved at all with last 0.75% rate hike.

          I wonder if wallstreet is saving taper tantrum fireworks for October, just before Midterm elections, to force Fed to reverse course?

        • Wolf Richter says:


          Yesterday, stocks fell. Stocks rose in only two of the past eight trading days. Why do these comments only show up on days when stocks rise, LOL?

        • SS says:

          My bad, focusing on only headlines made me miss trend.

          They are even celebrating Netflix 1 million subscribers lost today. So the euphoria made me wonder if there was a rally going on.

        • Einhal says:

          Wolf, a 3% increase in the S&P based on nothing is pretty remarkable. It seems that all “investors” have hope that the Fed will start lowering rates and printing again. I keep seeing article after article in the mainstream media to that effect.

        • joedidee says:

          Taper tantrum about to begin
          only end JULY will jerry stop QE and START QT aug 1

          already banksters crying
          Dimon said so – so Jerry ready to capitulate
          IMPLEMENT WEF global depression economy on schedule

      • Mark says:

        I like ” a short hibernation”

    • Djreef says:

      Yay! Houses are about to get affordable again!

      • Escierto says:

        Seriously? At a median price of 2 million, they would have to drop 75% before you could describe them as affordable. I doubt this will ever happen.

        • Wolf Richter says:


          Median household income in SF in 2020 was $119,000. It’s higher now. So that changes the equation of what is “affordable” here. But $2 million for a median house is ludicrous.

          Also note that the majority of the SF market is condos, not houses. Nearly everything that got built over the past decades (ca. 4,000 housing units a year) has been multi-family (condo and rentals). So the median dwelling would be closer to a 2-br condo than a house. The median condo price = $1.25 million.

        • SS says:

          In Seattle area, I am seeing 20% drop against insane prices of Feb 2022. The houses that fail to cut don’t get sold.

          However it’s still ~20% higher than pre pandemic. So expect more 20% correction in next 6 months.

          It will still remain in bubble despite reaching pre pandemic, as it will still remain 30% higher than 2007 bubble peak. So it will then correct over 30% from 2020 level in next 5 years.

          In essence, Seattle housing has a long way to drop even to reach previous bubble.

          To reach real prices, expect 30% more drop from there.

          Anyone who thinks US housing is an investment today is either lying or smoking something out of this world.

        • JeffD says:

          It was ~$400/sqft in south Orange County 2 years ago. It is now ~$600/sqft. That’a 50% increase in two years. Madness.

        • phil m says:

          Wolf, just to share a little different market perspective. I live in a village in upstate NY .. 15 minutes from the state capital Albany. 2200 or so population. 4 Universities within a 20 mile radius. The NY Nanotech Center is a 15 minute drive. GlobalFoundries and their Fab is 35 minute drive. Believe it or not we the area is even considered a ” destination” especially this time of year (Saratoga Springs, Lake George, Adirondacks). Median Household income in the village is $94,500 last #’s I had. Median Value of a house ( with mortgage) is $244K. Crazy

      • sc7 says:

        You mean back to 2021 affordability with the higher interest rates?

  2. Phoenix_Ikki says:

    Love love love this..could this early Christmas for me in summer? Those 30 – 40% down will hopefully translate to equal if not more price decrease. I know Kunal don’t think so but let’s see how this plays out.

    For all the flippers out there, have fun and practice what the Crypto crowd’s motto #HODL

    • Djreef says:

      And so, the cool thing is this. When we go into recession, interest rates will plunge, then we can refinance.

      Win win!

      • SoCalBeachDude says:

        Interest rates are quickly returning to a normal level of around 6.00% for all mortgages with people with excellent credit and will stay at or around that level for the foreseeable future.

    • Wisdom Seeker says:

      Housing markets fall slowly. Look at the data from 2004-2010. You might get a good price in Christmas of 2025…

      Also, from the data it looks like China is about 6-12 months ahead of USA on the housing contraction thing. So basically this housing bust is going to be a nearly-global double-whammy.

      • Phil says:

        You can’t step in the same river twice. 2004-2010 did not have rapidly rising interest rates.

        • Wisdom Seeker says:

          Disagree for several reasons.

          First, in 2005 the rates moved up nearly as fast as they have in the past year. (e.g. +1.25% in 12 months in 2005 vs. 1.5% over past year, using 10-year Treasury as benchmark.)

          Second, there was additional tightening back then as ARMs suddenly became unattractive and subprime seized up. That’s not happening now (AFAIK, be happy to learn more).

          Third, we have far more excess credit now than we did then, so the current tightening is still pulling on a very loose string. For cash buying investors, housing still looks attractive as an investment compared to stocks or bonds. Especially those who expect rates to drop soon and support the high prices on a permanently high plateau.

          Finally, housing market behavior is psychological, and people’s emotional reaction patterns aren’t any faster now than they were then.

          Basically, the herd turns slowly. If the herd had a clue, supply would be far higher and prices would already have plummeted.

          A big lesson I learned in 2005-2009 was that if you’re fortunate enough know how the story has to end, the plot takes far longer to unfold than you would think.

        • Miller says:

          @Wisdom Seeker
          You may be right about the timing, and for now we’re also looking at later in 2024 or 2025 as the likely point when the US housing bubble truly does collapse, and homes become more affordable in line with US incomes. Still, Phil may also be right because the inflationary pressures this time around means the Fed can NOT come to the rescue like it did in 2010 with ultra-low interest rates and QE to halt (or re-inflate) the housing bubble.

          For all the flak JPow gets and for all the blunders the Fed did commit with ZIRP and QE, under his leadership and Bernanke and Greenspan, he is at least a student of economics history. He’s well aware that of all the sources of economic crisis, runaway inflation is by far the most dangerous–much more than recessions (difficult but temporary), much more than falling asset prices (which has to to happen to pop asset bubbles). Inflation crushes a currency and faith and trust in a country’s management, leads to social unrest and de-motivates people, who see the value and hard earned income for their hard work stolen from them. Many countries with inflationary crises have never recovered, and persistent inflation has been at the heart of factors that ruined once great major powers–the British, Ottomans and even the Romans. (There’s a reason they teach those lessons about how the Roman coinage was debased, and connect it to the fall of the Roman Empire) Point being that Powell and the Fed don’t have the option of reversing course this time, for the first time in 40 years. If they let inflation get out of control and debase the US dollar’s buying power still further–especially given the vulnerability from a high US trade deficit–then trust in the USD and financial and administrative management collapses, and social unrest takes over. The Fed is hemmed in and has to follow Paul Volcker’s example now, which may accelerate the housing bubble drop.

        • Wisdom Seeker says:

          @Miller, thanks for the detailed comments! I really appreciate your insights.

          I agree that we won’t get an “early turnaround” in the housing space because the Fed’s back is to the wall on inflation.

          I think that means the US housing market will have to fall farther before it can bottom. That might take longer too. But it needs that. We all want our children and grandchildren to be able to buy a decent place to live, at an affordable price, with their own earnings.

      • Magnesium Sulfate says:

        I could use a few articles explaining everything going on in China. Every headline I read things get more and more ominous; frankly I don’t understand how their economy is still functioning as well as it is.

        • Miller says:

          It’s functioning as well as it is because the “China’s economy is collapsing” meme is the econ and investor equivalent of “Boy who cried wolf”–it’s been repeated so often for the past 3 decades and been so totally wrong (often based on either misleading or totally inaccurate info) that it’s lost all credibility. Not trying to sound jaded about it, but I used to be one of those people repeating the “China’s collapse is around the corner” meme myself and making decisions based on it in my early investor clubs, and got badly burned in a lot of my investments because it was always exaggerated. So I’ve learned the hard way to take it with a grain of salt, look closer at the data and every time, there’s a bigger perspective that gets missed. This got shown even more when my team was assigned there–there is so much misinformation in the US media (esp the financial press) about China that we’re better off not reading anything at all, at least not until we visit the place and see things for ourselves. Even those new “zombie neighborhoods” that were indeed over-built (and a cause of the real estate mess there) weren’t done as a blind money pit for insiders–China is seeing huge mass migrations from its countryside into new and growing towns (and a lot more immigration from ex. Vietnam and the Philippines than we normally realize), and the new housing was built in preparation for that. Sometimes the urban planning is off and the new population doesn’t materialize, but the articles here often ignore the many cases when those neighborhoods did wind up being filled by new workers entering a boomtown, so as investors we get a misleading picture.

          China’s finances do need reforms in a lot of places but the meme fails because of several critical factors that give China a lot of economic stability based on real production of goods and services. Whatever its imbalances and dislocations, China is the world’s top manufacturer and exporter and for all the flak it gets, it produces valued goods and services that are affordable to the world. It also has a massive trade surplus which cushions any economic blows (compared to the USA’s historic trade deficits, which make us much more vulnerable to economic shocks). China of course has had its own ballooning housing bubble and other asset bubbles but for all the talk about Evergrande, one critical detail usually left out is that the economic managers there specifically set out to deflate those bubbles, earlier and in a more aggressive way than the Fed here. Popped bubbles are what they’re going for, and they have a lot higher Millennial homeowner levels than we do partly because they still hold to the old fashioned idea that housing, residential at least, should be shelter more than investment.

          On Covid, here too the US press usually gets it wrong and we wind up getting confused by misinformation. For all the obsessed headlines and click-bait about shutdowns, almost all of China’s plants and delivery zones are open–the shutdowns in fact have been rare, and the Chinese emphasize testing, vaccination and ventilation instead. (Our partners there are even able to attend concerts and festivals without masks, just as long as testing shows it’s clear) And even when a big center gets shutdown like Shanghai did, they’ve built a lot of redundancy to shift production to other centers, or wall off residual manufacturing even within it. A lot of the opponents of Fed tightening were trying to point to the claimed supply chain contraction from the usually nonexistent China shutdowns as the “real cause” of US inflation (instead of the flooding of our monetary system with QE and ZIRP), when in fact the supplies never fell as much as the loud headlines or US media squawkers were claiming. Not to mention that China as usual, is playing the long game with Covid by minimizing the disruption to its workforce from bad Covid cases, or even mild ones causing long Covid and organ damage. One contributor to US labor shortages has been all the American workers either out sick acutely with Covid, or even more troubling, dealing with damage to their lungs, heart, liver or other organs that shows up out-of-the-blue a few weeks or months after the infection. That’s potentially millions of working Americans hobbled and our workforce facing reductions based on the strains we’ve already seen.

          The main problem as we learned when posted there, is that even most US journalists based in China (and especially for the financial press) don’t speak Mandarin, often not even basic phrases. They also get the details wrong, even basic things. Ex. “the one child policy” was a mis-translation of what it actually was–a way to reduce crowding in crowded urban centers that wasn’t applied much at all in suburbs, military bases or rural farmland (where most of China’s population still lives), hence the “China demographic crisis” and still more exaggerated headlines. This is just a terrible way of doing journalism, and it’s impossible to get an accurate picture of a country as massive and super-complex like China if a reporter can’t even understand basic conversations there. China already has the world’s largest economy by far by GDP PPP (which is how the UN and all the intl. institutions cite it), and it’s not just copy-cat products or cheap manufacturing–there’s a whole lot of research and high-tech there now too, but our own reporters have almost no ability to even scratch the surface of it without basic language skills. Not saying we’d want to live there, but they’re a lot more capable and functional there than most of the Western press really understands–they’re a 4,000 year old civilization and a nation for more than 2,000 years, so they obviously have a lot of historical perspective and ability to overcome crises. And it gets irritating how often misleading info comes out of our media about it. For any investments connected to China, a good rule of thumb is probably to hold off on doing anything at least until you can either visit the place and see it yourself, or get media and reports in other languages and news sources as an accuracy check. All of us got burned way too many times from the incomplete pictures or flat out inaccuracies in the US financial articles.

        • Miller says:

          I’d also just add to be fair about it, the language skills deficiencies there aren’t just among US reporters, too many American companies trip up on this too, or at least used to until recently–we had a lot of missed connections and misunderstood transactions when we (for a while) sent team members or partners to China and India without the language skills, and it was very costly. Now our policy is that posted teams in China have to have at least leaders who are Mandarin-fluent, and those in India have to know Hindi and whatever language is spoken in the state (Bengali, Tamil or whatever it is). Most US firms have been wising up on this to stay competitive, but it makes you shake your head that so many tried to skirt by for so long without basic language skills. We really had no idea what was going on (and no idea what important info we were missing) before we put a stronger emphasis on the language skills, only an illusion that we thought we did (and our partners having a lot more power in negotiations).

        • HowNow says:

          Miller, I want to thank you for sending along this very candid appraisal of how questionable our understanding of China, for “investment” purposes, often is.

        • SIMON LUI says:

          China CCP leaders have PBOC as their ATM.
          PBOC can print 3 – 8 trillion Yuan a year easily to cancel the debts of any SOE.
          Why China can print without hyper inflation ?
          It is because China has $300-400 billion trade surplus every year from 2002-2019. As long as China can have these $300 billion trade surplus with US, China is safe.
          It was American consumers who are suckers subsidising China printing Ponzi.

      • DarkMatter says:

        If they can go up very fast, then they can fall just as quickly.

    • Lynn says:

      May we both find an affordable home this year or early next!

      • SoCalBeachDude says:

        What price are you looking for and where and for what?

        • Lynn says:

          Northern Ca; mid Mendo or mid-northern Humboldt. Below current market rate (decent ugly or fixer) with good structure. For a home for myself. I’d be happy with just a fixable older mobile on a small piece of land near town.

      • gametv says:

        Wait for 2-4 years for the bottom. It will take time. We need to have wave after wave of lower comps, to the point where noone looks at a home as an investment and instead sees it as an expense.

        • Miller says:

          Yeah we’re still thinking this may be true for our own next steps in RE. We’re hoping that the combination of QT and sharp rate increases, and the pressure on the Fed due to inflation might lead to a faster deflation of the current housing bubble than the one in 2007. But still not expecting anything until 2024 at the earliest, or maybe 1-2 years from there.

  3. JM says:

    Let me look at into my crystal ball…. rents are spiking as fair weather real estate investors try and rationalize over paying for their work from home homes.

    Then, as the number of rental units on the market increases – rent prices will drop – suddenly the market will have an over supply of both units for sale and rent. Game over.

    The only people who won over the last 2.5 years were people who bought at the begining of the pandemic with killer interest rates prior to housing price inflation. Cheap interest rates dont matter if you over paid by 30% for the property. Always make your money on the buy.

    I look forward to purchasing some cheap shit condos at a discount in 2023.

    • The Falcon says:

      May need to wait until 2024-2025 for the big discount JM. But I’m rooting for your crystal ball to be correct.

    • Miller says:

      Yeah that’s where rubber really meets the road here. The rent spikes have been an even worse result of this housing bubble and everything bubble than the outrageous spikes in home prices. They pressure the people who have the least in their bank accounts and the most modest savings–the working class, students, middle class, young families–to pay for the excesses of landlords who FOMO’ed and bought at the top of the bubble. It’s one thing if rents rise modestly to meet costs, but in some markets (esp in southern California, New York and New England) they’ve been seeing rent increases of 40 to 60 percent in a span of two years, and because it’s so widespread, renters have nowhere to run. This is outrageous, and a direct attack on the principal that housing should be shelter and not investment, first and foremost. Housing prices should never have been allowed to rise like that in the first place–it’s one of the ways that excessive QE and ZIRP did direct and terrible damage to millions of Americans and their finances.

      • Steve says:

        Renters collapse/exodus imminent from layoffs. It’s the only way housing and inflation come down.

      • ru82 says:

        Good thoughts.

        Who says housing is supposed to be affordable to everyone. Sure it was when the U.S. was a manufacturing power after WW2 through 1970s. There used to be a lot more mom and pop businesses and thus a larger middle class. Now we have monopolies in almost every industry. Money flows from cities and towns to the headquarters of Walmart, Amazon, Home Depot, etc.

        The housing price to income ratio in the U.S. is still the lowest of all developed countries.

        The new normal will be middle class and above will be the ones who can afford a single family home.

        I now a lot of people think housing is going to become more affordable, but it is not in the long run.

        FYI. Housing Price to income ratio per country:
        US = 4.8
        UK = 8
        Canada = 9
        Germany = 10
        Japan = 10
        France = 11
        Italy = 11
        Russia = 16
        China = 30

        Out of the top 113 countries by size, only 3 have a lower ratio than the U.S. They are Saudia Arabia and United Arab Emirates and South Africa

      • Jim Baumgartner says:

        Aren’t the greatest rent increases in places that the government subsidizes rent, thereby propping up slum lords (investors with a lot of deferred maintenance) and continuing to inflate the bubble? Eviction moratoriums continue in these locales as well. As others have said, it will take years to deflate this bubble–one major reason will be the continuing rent subsidies.

    • TheOldMan says:

      How about the tens of millions who refied the last two years under 3% and aren’t going anywhere. Mortgages on our homes below 1br rents. No reason to go anywhere and if we do why sell? Just rent it out for whatever current market dictates and enjoy massive cash flow. We are the winners and there are millions upon millions of us. Not going anywhere but if prices actually crash will pick up some more rentals with cash

      • Gooberville Smack says:

        You just might have a point there, but we prefer you stick to the narrative.

  4. 2banana says:

    The Tech stock implosion has about 6 month lag time on the housing market.

    And it’s only just beginning!

    • Wolf Richter says:

      Yes, what’s interesting this time is that there is this mix of holy-moly mortgage rates and the tech-stock/startup/biotech-implosion. We’re seeing sales plunge in areas of California that aren’t part of the tech stock scene. It’s across the board. So this would be the impact of mortgage rates. I’m not sure to what extent the tech-stock/startup/biotech implosion has started playing a role yet. But it will play a big role.

      • Heron says:

        I’ve been using this site to track biotech layoffs – not looking to good

        I’ve both heard and read the industry is hurting from the lack of easy VC money.

        • Wolf Richter says:

          Yes, the easy money is drying up.

          With biotechs, there is the additional issue that if they don’t get their proposed drug through the first trial, they collapse on the spot. And we’ve had a lot of that recently. They release the results of the trial (failed), lay 95% of the staff off, shed their office space, and that’s it. Just like that.

          A lot of biotechs got funded and even IPO’ed based on very unpromising ideas, it seemed, because everything just flew, and now that whole thing is coming down.

          In the office sector, the “life sciences” segment has been riding high even as the regular office segment fell into the dumpster. Now the life sciences segment is looking at the same fate.

          There are a lot of distortions that need to get worked off the hard way.

        • Cas127 says:

          Biotech has historically been the insane redoubt for the zero revenue IPO.

          It is amazing the number of biotechs that have come to mkt and failed…only for the IPOs to March on.

          My theory is that wealthy doctors (er, 90 pct of them) love the sector, have bundles of cash for flyers, but lack the time/financial skill set to winnow through the huge amounts of chaff.

          Things may be slowing, but startup biotechs have always had numerous, long shot IPOs.

        • Cytotoxic says:

          Thing is, if a biotech has a drug that fails, it can still hold onto that drug and its patent and that will pay off if it’s found useful for something else.

          When a new lab PI starts up in academia or some other research facility, one of the first things they do usually is buy a kit that contains a bunch of drugs that proved safe in people but failed later on. Yes, there are apparently specifically tailor made kits of these failed drugs. They then throw these at their cell line/pathogen/animal model maybe? in culture and see if anything cool happens. If something cool happens, you’ve got a drug with an effect of interest that has already proven safe in people and been otherwise characterized to some extent.

      • Lynn says:

        According to several local RE agents techies bought houses up here sight unseen for cash with just a phone call to the selling agent. We are far away from anything, especially tech centers.

        I’m waiting for the houses I looked at with seriously bad structural issues to come back on the market. The ones I lost the bid to some techie that bid 30% over asking price with no inspection and never setting foot in the place, lol.

        • Seneca's Cliff says:

          I have a nephew who is a young analyst at Blackrock in SF. He lives with 3 other guys crammed in to a small apartment near downtown . Late last year he decided he needed the passive income that would come from a rental house. So he “studied the geographic housing market” and purchased a rental home sight unseen in Atlanta to get the “passive income.” He had never even been to Atlanta. Not sure how well this will work out for him when the passive income turns in to a passive loss. Will definitely be one of folks selling in to a declining market accelerating its Thelma and Louise plunge off the cliff.

      • Steve says:

        Alot of those layoffs are the good jobs that make people rich and many of those people are also flippers. But greed makes flippers overleveraged, and when they lose renters and jobs their properties are at risk.

  5. unamused says:

    It may be helpful to think of them not as homes, but as large stationary poker chips. People gamble with them.

    If I had a home in CA I would sell it and go live somewhere with a fine quality of life at a reasonable cost, which unfortunately excludes most of the planet. .

    • gametv says:

      The smart owners will be selling as soon as possible and dropping their price to get a sale. The dumb sellers will think that they can get the prices from 3 months ago and wait for the market to “bounce back”. Drop your price now and be the first out. Consider that you got greedy and held onto the property a couple months too long and it cost you 10-20%. Those that dont sell now will lose 50% off the peaks.

      • unamused says:

        Remember what I said about poker chips?

        I would not expect prices to fall to a level where the median person could afford one. CA has lots of millionaires and prices have been going way higher for forty or fifty years.

        • Jon says:

          These kind of comments really make me smile.
          We think in California we are special and this time is different

        • Cytotoxic says:

          YIMBY is going to take all these ‘chip holders’ to the cleaners.

        • TheOldMan says:

          What these hopefuls never grasp is that 50% are renters. So the median priced home is bought by someone closer to the 75th percentile than the 50th. The median income person has never been the buyer of the median home here. With prop 13 there is little incentive for long time owners to sell. We are and always will be supply restricted which distorts our market horribly. When prices start dropping and they have wait 3 years and then buy. I’ve seen that pay off for three decades. Hard to lose doing that in CA

        • Wolf Richter says:


          Based on your stuff about the median price, it seems you’ve got some major misconceptions about renting. If you equate the 35% of households that rent – not 50% — with the lowest 35% on the income scale, you’re clueless about the industry of rental property.

          Renting is a CHOICE for many people. Sure, some people would like buy a house, instead of renting an apartment. But others don’t. Luxury rentals are a big part of the market. Many people who rent in SF or Manhattan or Boston or Miami could buy a mansion for that amount out in the boonies. But they don’t want to live there, and they don’t want to live in a house at all, and they want the freedom of renting, and they have enough money to enjoy it, and they have enough money to buy something out in suburbs if they choose to do so. They like living in the middle of the action.

          Even single-family rentals have gone way upscale because that’s where the market is. These are nice houses, purpose built for rentals. Renting for these people is a life-style choice.

          There are rentals in Manhattan that cost $30k a month. The median 2-bedroom rent in San Francisco is $4,000 a month. Nicer 2-bedroom apartments rent for $6,000 a month and up. People rent these places because they WANT to, not because they’re low-income people.

          Renting a home is like leasing a car. People who lease a new car don’t do it because they cannot afford to buy a new car. They do it for other reasons; maybe they want a new car every two years and don’t want to deal with the hassles of trading cars, etc.

      • The Falcon says:

        Be first, be smarter, or cheat.

        Easier to just be first.

      • Steve says:

        Because of greed, sellers chase prices down and never get a sale. Greed often leads to bankruptcy. As in stocks you need to know when to cut your losses which is much harder for slow moving R,E.

      • DarkMatter says:

        The smart owners saw this coming and sold – the rest missed the top by a few weeks. It’s funny how sentiment can change from FOMO to signs of Armageddon in such a short time.

        From the dot com bust to the financial crash, we should have learned by now.

    • The Colorado Kid says:

      large stationary poker chips

      One of the funniest comments ever (and most astute)

    • Franz Beckenbauer says:

      The casino is closing down for good.

      Please dispose of your plastic chips accordingly.

      Yours truly, the Fed.

    • phleep says:

      I have:
      ” … a home in CA … with a fine quality of life at a reasonable cost ….”

      Here in comments, people of course do not disclose a full history, overall financial statements and a portfolio of life choices. The story is cherry-picked before skipping to blame games. The point is, bad timing and bad choices mean, as unamused opines, “life at a reasonable cost … unfortunately excludes most of the planet.”

      “Unfortunately” many billions of people cannot intelligently process the complexities of life on said planet. A planet that makes life easy for the mean intelligence idiot will soon, itself, be degraded and die. This universe is not a theme park for idiots. It is a sorter and thresher, plenty of the time.

      “Yogi has it better than a millionaire, that’s because he’s smarter than the average bear.” Of course, time and circumstance will eat my lunch too, as it has, every organism before me.

      • Malthus says:

        A great comment! And written at 6:15AM too.

      • VintageVNvet says:

        BS holier than thou hypocrisy phleep…
        Keep solidly in your mind that IF you are not part of the solution, as you apparently are not, you are part of the problem. ( Per one of our sneered at philosophers after he got out of jail for raising such ridiculous concepts.)
        In this case, the problem is the sneering of the so called educated elite.
        Just another class that the oligarchy uses to beat down the rest of us.
        SO sorry ”old boy- or other” but time and enough to ”reset your zeroes”
        Good luck and may the Great Spirits Bless your every sincere effort.

  6. Trich says:

    Given the Bay Area’s affordability issues, I would say, again, that prices are more sensitive to demand than supply. There will always be a shortage of supply in the Bay Area, just like there was heading into 2008, yet prices still declined.

    Some anecdotes from some of the craziest markets in the US — Idaho and Utah, which along with Texas, are harbingers of things to come. I’m taking this data from the spreadsheet released on a monthly basis by (presumably from the NAR) broken down by county and going back six years. The most recent spreadsheet compiled data through June. I then compared it to the current inventory numbers and median listing prices:

    Ada County, ID (Boise): June Inventory, 1,812; Current Inventory, 2,555
    June Median Asking: $627,700, Current Median Asking: $623,000, peaked in May at $685,000.

    Salt Lake County, UT: June Inventory 1,697; Current Inventory, 2,425; Peak inventory from 7/2016 through current, 3,180 in 10/2018, pre-Covid average inventory, around 2,500.
    June Median Asking: $649,000; Current Median Asking: $625,000, peaked in May at 650,000

    Utah County, UT (Provo): June Inventory, 1,648; Current Inventory, 2,585; Peak inventory from 7/2016 through current, 2,635 in 9/2019, pre-Covid average inventory, around 2,100.
    June Median Asking: $615,000; Current Median Asking: $599,900, peaked in May at $618,000

    Washington County, UT (St. George, fastest growing county per capita in US during pandemic): June Inventory, 1,175; Current Inventory, 1,203; Peak inventory from 7/2016 through current, 1,878 in 3/2019, pre-Covid average inventory, around 1,600
    June Median Asking: $749,500; Current Median Asking: $685,000, peaked in March at $795,450

    As a point of reference, the median asking price in 12/2019 for three counties in Utah were as follows: Salt Lake, $469,500; Utah, $399,900; Washington, $439,375. Ada County, ID was $402,648.

    There’s a possibility that the blend of massive, custom luxury homes all coming online in Washington County in early 2022 explained the absolutely insane runup in comparison to the other bubbly intermountain west counties in the median listing price. Or Washington County is simply in a bigger bubble than the rest. From what I’m seeing in the limited access I have to what actually sold, the prices in February through April were aspirational set by the new custom homes and followed by all the listings for homes that were 15 years old or newer.

    The asking price has come down literally $65k between the end of June and now indicating a demand problem. If anything, people here make less than the other three counties.

    • Wolf Richter says:


      “There will always be a shortage of supply in the Bay Area,…”

      Hahahaha. No. The Bay Area has lost population. San Francisco lost something like 6% of its population in a 12-month period through mid-2021, and more than that from the peak, which was in 2018. And throughout, SF added about 4,000 new housing units per year. All this new stuff got built, while people left the city and area. There is all kinds of housing (apartments and for purchase) available in the Bay Area. There is no housing shortage.

      A lot of stuff is vacant. Vacant homes in San Francisco are such an issue that people are trying to put a proposition together for a vacant-home tax and get it on the ballot. This is a real issue. So you can forget about your notion of “There will always be a shortage of supply in the Bay Area.” That’s just nonsense right now.

      But there is a shortage of “affordable” supply. And big price declines are going to alleviate that shortage of affordable supply. We’re going in the right direction, but this will take a long time.

      Once the area becomes affordable again, people wills start moving in, and population will grow. But not now.

      • Jason says:

        That 6% is a huge number for a small Central Valley town…Not good

        • Wolf Richter says:


          Yes, that would be a crowd. I don’t think many of them moved to Fresno tho. Some moved to the Tahoe area, to the Foothills, and out of state. Seems lots of work-from-home people moved back to where they’d come from. A bunch of companies moved to other states, and some switched to permanent work-from-home and gave up their offices here.

          SF is still a very crowded place with lots of people and traffic jams. I’m not even sure I can tell the difference. Maybe a little less traffic congestion than before.

          I went to Costco on Saturday. It was mayhem. Lots more people need to move to some other place before this gets “normalized” or whatever.

      • OpieT says:

        Google “vacant homes San Francisco”. 40,000 units estimated to be empty.

        • Jon Y says:

          One note about vacant homes in California. If your parent is elderly, you may wait years for the parent to die in a care facility before selling the parents vacant home. In California, when the child inherits the property the basis is stepped up and then the house can be sold without getting smacked down with capital gains taxes on millions in gains if your family bought back in the 50s/60s etc.

          My family is in this situation in Palio alto. Grandmothers house has been vacant for years, bought for $18k in 1955.

        • gametv says:

          It makes total sense to own a vacant home in a real estate market that is moving higher, but when it is moving lower, sell, sell, sell.

      • Franz Beckenbauer says:

        A few months ago i talked to a builder on a construction site in Germany, super-quick-built cardboard box brick condos that, according to him “not a lot of people could actually afford”. They had to pretty much stop building due to inflation, supply chain problems and sub-contractors just leaving because they got paid more somewhere else (a lot if not all of sub-contractors in Germany come from poland). Accordingly, only about a third of the finished condos were populated with the rest either a dead construction site with stuff lying around everywhere or empty. Funnily, around the construction site, more and more apartments in older houses were visibly emptying, my guess is, due to “health reasons”. When i asked the guy who in the world should buy these condos, he replied “There’ll always be enough people”.

        This kind of construction site was all over the place in that german town.

      • Trich says:

        If the Bay Area has an abundance of supply, then basically every market in the country outside of maybe NYC has too much supply. I would say the vacancies, outside of the city itself, are a result of the awful affordability, which is a demand issue. People leave the Bay Area because it has become increasingly unlivable with housing cost perhaps being the #1 problem. They may have built additional units over the years to meet this demand, but they kept the high prices. There’s not enough people who are willing and/or able to pay the astronomical prices, like you said a lack of affordable supply.

        While I believe there are likely other factors at play in San Francisco that are creating chronic vacancy problems in the city, I’m not sure that translates to Santa Clara and San Mateo counties, where I suspect it’s primarily the ludicrous prices that are driving people out.

        I handled foreclosure mediations in Nevada in 2010-2012, and *that was a supply-driven hellish real estate landscape. Another lawyer told me the first house he bought in Vegas in 1989 for $150k that he had then sold around 1995 was then appraising, according to the county in 2011, at the same price he paid in 1989. The banks had to manage zombie inventory for years, entire neighborhoods and condo towers were probably 20% occupied circa 2009-2012.

        • HowNow says:

          Thanks for the perspective. So, do you think a large portion of the vacancies in some of these outrageously expensive cities be bank repossessions (REOs) or are they primarily just patient “investors”?

      • Sams says:

        Shortage of poker chips, to follow up unamused;j

      • phleep says:

        “I went to Costco on Saturday.”

        Respectfully, that is CA Mistake Number One. Off-peak hours are the only reasonable time to use things in CA. That includes freeways, beaches, etc.

      • Matthew F Scott says:

        This would be a great topic to do a piece on. How much of a glut of housing are we looking at in SF at this point? How much more is still being built?

      • TheOldMan says:

        With all due respect you are wrong about renters and you moved the goalposts mightily to refute my post. We are not taking about the country we are talking about California. Here homeownership is under 60% and lower in the high priced markets. I completely get that renting is a choice. I know there are affluent renters by choice. There are a bunch in my neighborhood that I know well. Many dont expect to stay more than a handful of years and others have the income but not the assets to put $500K down.

        Thats why I said closer to the 75th% than the 50th% which is 100% accurate. On the whole renters are lower income and than homeowners which is indisputable. So keep rolling out NY, Miami, Phoenix examples but those are not NoCal or SoCal where the median income household has not been the typical purchasor of the Median priced home in many decades.

  7. Ben Sargent says:

    The housing took 3 years or more to level out for the 2008 housing and bank debacle. This process just started.
    Any chance apartments are rented and then turned into Airbnb or other motel style rentals ? That practice could be driving rental prices higher. Overseas many condo and apartments have properties available but are not managed by individuals. Called service apartments in the far east

    • gametv says:

      Keep in mind that the Federal Reserve stepped in and lowered interest rates to put a safety net under home price declines. That wont happen this time. Going to be massive price declines.

    • Heron says:

      Little to no chance. Many major metro areas are cracking down on short term rentals, making the minimum period 30 to 90 days. San Diego, Honolulu and many other places have enacted these restrictions. Plus you can look at STR stats and see the total number of them is in decline. If anything, some of these “moguls” will probably convert to long term rentals but stop paying the mortgage if theyre underwater. Happened in the last bubble, see a lot more of that this time around. Thats why if youre a renter you need to keep an eye on your landlord – if he stiffs the bank, you need to stiff him! Maybe even contact the bank directly and work out a deal whereby you pay them some nominal amount to keep the property well maintained.

  8. Phoenix_Ikki says:

    Just as I get really excited about this data, did read about one thing that dampen my mood a little. Looks like foreign investors purchasing has picked up again. Probably won’t be big enough to save this market but nevertheless, the thought of having to compete against Chinese or other foreign cash only buyers in SoCal market brings a not so good taste in my mouth…

    • Flea says:

      Bloomberg had a article about rich Chinese trying to leave,don’t know if xi will allow that my guess he’ll no .You can leave but now your money

    • Lynn says:

      A lot of the Chinese money seems to be laundered offshore and a lot of it possibly in bit coin etc as it’s illegal for much of it to leave the country. Double book keeping is reported to be happening with some of the property developers and some of that money is funneled through bit coin etc. Possibly more money coming from dwindling illicit offshore sources than the legitimate ones which are kept track of.

      Best barometer of all that I think is the ups and downs of the RE market in Seattle.

    • Lynn says:

      Forgot to add, because of the sanctions on many rich Russians there is extra pressure on FINCeN to audit foreign money laundered in US Real Estate and businesses. It may also have an effect on some foreign buyers.

      • phleep says:

        The defense bill passed over Trump’s veto at the end of 2020 had a rider requiring the disclosure of beneficial owners of shell companies (which buy great masses of real estate, formerly with concealed owners, not least in FL and NY, a pointed reason for the veto). I.e., it was a vast money laundering machine, through a real estate loophole in anti-money laundering laws (alongside art objects, etc.). BUT, the newly required disclosure is not public, it is to Fed regulators and enforcers. Giving at least one RE mogul a huge reason to be back at the top of federal law enforcement. Guess who?

    • Tom Jones says:

      This should be outlawed. Only US citizens should be allowed to own residential property in USA. Without foreign buyers or massive immigration, prices will drop within a decade as boomers die off and suddenly available homes exceed the demand.

      • Oji says:

        “Only US citizens should be allowed to own residential property in USA”

        Xenophobic nonsense. Millions of permanent residents cook your food, build your cars, teach your kids, and own companies that employ Americans. They live and work here for decades, paying taxes, following the laws, raising kids– American citizens– and you want to deny them home ownership?

        What the hell is wrong with you?

        • Merry says:

          Let them RENT. We can’t go to THEIR home country and buy real estate, THEIR home countries don’t allow it.

          The US should not allow non citizens to buy real estate, period.

    • Not Sure says:

      Phoenix, my kid goes to a reasonably nice daycare facility in a decent part of town here in Southern CA’s Inland Empire (low-class San Bernardino County, not the usual Chinese enclaves closer to L.A. / OC). Something has really shifted in the last couple years here. I’d say about 75% of my son’s classmates have Mandarin-speaking Chinese parents. Few seem to speak any English at all, so they’re clearly pretty fresh off the plane. They drive Teslas and higher-end models from BMW/Merc only (M and AMG are popular with this crowd). They show off expensive designer clothing & accessories at all times. They have plenty of USD to spend, and they’re definitely buying houses around here. I suspect pretty much all of them are paying cash. I don’t know what that means for the local housing market long-term, but there is a 0% chance that it’s not having a significant effect right now. The newcomers don’t seem to have any qualms with over-paying for anything and local middle class buyers simply aren’t going to be able to compete with them on purchasing power.

      • Lynn says:


        I get the impression some other Chinese populations might have pulled back on buying partly because of tensions.

  9. The Falcon says:

    Over the past 60 days there have been 3 categories of sales in my zip code in SoCal:

    1. Inferior properties – selling after 1 or 2 significant price reductions;

    2. “Perfectly Fine” properties – selling at near-list with 0 to 1 price reductions; and

    3. Top Notch properties – bid up hundreds of thousands over list.

    At the moment there are 4 large Perfectly Fine 3K to 4K sq ft homes on the market one neighborhood over that are just sitting. 3 of them are priced 5% below the Spring peak and still sitting.

    I think we’re already down at least 10+% on Inferior Homes and 5+% on Perfectly Fines, and the rest of the year will see the numbers get worse.

    • Phoenix_Ikki says:

      Well, SoCal do have more than enough of those special breed of stupidity + mighty than thou + FOMO + NIMBYSIM buyers to keep buying even at the top or when it’s rolling over.

      • HowNow says:

        You’re right. But most of those you’ve described are from the Midwest, the South or the NEast.

      • phleep says:

        So being a desirable premium place is a sin?

        • sc7 says:

          This board is full of people bitter and jealous at those who have achieved more than them.

          It’s quite sad.

  10. Mario Furtado says:

    I just sold my house in Los Angeles (closed Escrow July 11th) and the whole month of June (and part of July) I was sweating bullets. If we fell out, that would have forced me to take a huge write down in sales price. Buyers were just starting to adjust to the sticker shock of higher mortgage rates; our buyer had locked in a mortgage rate from early June so they also had some decent incentive to complete the sale. I’m so happy it completed!

    I’m now renting a 2,700 sqft house for $4200 a month. That sounds like a lot, but to buy the same place with 20% down (based on location and sq. ft.) it’s about $9-10k PITI at these prices.

    Crazy times. You can’t have rents half the cost of ownership as a sustainable situation. Either my rent is going to go up dramatically over the next two years or house prices will have to adjust down to bring a PITI close to rental parity.

    • Phoenix_Ikki says:

      Great point and I think that’s why a lot of people, especially the FOMO buyers recently will be in for a rude awakening. As insane as rent price is, if with 20% down your mortgage still can’t cover what the house rent for, all it takes is one job loss away, then you’re completely SOL. This is as simple math as it gets but am I surprise people don’t even think about the baseline worst case scenario? No, not really, seems like most can repeat 2-5 taglines from NAR and MSM and that’s about it.

      1.) Interest rate was low and still historical low…
      2.) Home price will always go up
      3.) As much as we hate the millennials and blame them for everything else, we do think their demand will continue to suppress inventory
      4.) Foreign buyers will save the day
      5.) Buy now before Blackrock buy up all the houses

      • SocalJimObjects says:

        Just over two-thirds of the respondents for a Transamerica Center for Retirement Studies survey conducted late last year say they’re confident that they’ll be able to fully retire with a comfortable lifestyle, with 24% saying they’re “very confident.” However, this confidence is undercut by other survey results.

        Americans are the most overconfident people in history.

        Sorry. Americans are the most delusional people in history.

        The CRASH to reality will be epic.

        • VintageVNvet says:

          ”Different Strokes for Different Folks SJO:
          Seems clear enough YOU understand that concept.
          While some of WE the PEOPLE will absolutely be ”taking it in the shorts.”
          Many others, much more than years ago,
          will be able to understand the NOW massive amount of ”current” information, and act accordingly.
          Much different from ”last crash” and even more so than when I was a kid going to the brokerage firm office to watch the ”ticker” with my many very wonderful ”mentor(s)”…

        • SocalJimObjects says:

          I am not sure I understand VintageVNvet. The market is a zero sum game. If some sellers have become smarter, then the same can be said to be true for some buyers as well.

    • gametv says:

      Mario – That buyer is dumb and dumber.

      The idea that you should buy a home at a low lock-in rate neglects to understand that the price of that home will be subject to future demand and that as other people have to pay a higher rate, they will naturally pay less for the property. So even if your buyer can afford the monthly payment, they will lose all their equity and soon be negative on the equity of the home. That is when that sucker will need to hand the keys back to the bank and a much smarter buyer will get it at a 50% reduction in a foreclosure.

      Stupid is as stupid does.

  11. Depth Charge says:

    Kunal is drowning in the bottom of a cheap vodka bottle.

    • Phoenix_Ikki says:

      Nah, he is dehumidifying his dry powder just in case if there’s a drop. Plenty of dry powder cash right? PPT bounced the market up today so add that to the stash of dry powder please

    • Flea says:

      Kirkland is best

  12. Ben Sargent says:

    Oh but one can have high price for rentals . I have seen in many markets because of currency location and places to park money for decades. Example is BA Argentina where homes and rents and priced in USD because of currency collapse. Housing is seen a place to park wrealth in a strong dollar period. Many of the homes in BA Argentina just sit and are boarded up. Same i’m Cairo Egypt where many homes just sit for years and decades. Unusual in USA

    • Escierto says:

      Very common here in San Antonio, Texas. There are 100 units in my condo complex and easily 25 to 30 are vacant. Mexicans use them to park cash/launder money. A lot of single family dwellings are empty as well.

    • Jon says:

      Usually cost of keeping home empty for long time is quote high.
      Shrewd investors would likely bail out completely than hang in there.
      Mom and pop investment become the bag holders in all asset classes.

      • Escierto says:

        The Mexicans are paying about $20k a year in maintenance costs on these condos but they don’t care. 20K is nothing to them. Occasionally they actually come up for a weekend. I helped one guy find his parking space – he hadn’t been here in five years.

      • Lynn says:

        It’s global money laundering on a massive massive scale- not investments.

        • HowNow says:

          Foreigners bidding up R.E. prices? There are some terrible ironies: Americans buying sh*t from Japan, SEast Asia and China massively and sending our USD overseas, presumably to get all the sh*t cheaper. And, the inflationary surge – the government’s effort to help the middle- and lower-classes weather the COVID storm ended up inflating costs such that the poor get punished the most.

  13. nevnej says:

    Big adjustment in real house prices could happen with 3 to 5 years of inflation running at 8 to 10 percent and nominal prices going up or down some too.

  14. Halibut says:

    “In San Francisco, the median price of single-family houses peaked in March at $2.06 million. It then dropped for three months in a row and in June reached $1.9 million, back where it had first been in March 2021. Condo prices were flat year-over-year.”

    Some of y’all SoCal folks would be amazed at the fabulous mansions you could buy in flyover country for that kind of money. Admittedly, you’d have to adjust to lower taxes, cheaper gas, less crime, and folks that are way too polite, but you’d survive it.

    • SoCalBeachDude says:

      Real estate is about LOCATION, LOCATION, LOCATION. California is pure paradise and stuff in Flyovistan just undesirable distant and nearly worthless junk.

      • Flea says:

        You must be a realtor,or misinformed. Because when I visited Orange County in early 80 s it sucked to much traffic . Plus it’s a desert with NO WATER Cheers

      • Marbles says:

        You read very much like American Patriot from Market Watch around 2009 or so. Just my observation.

      • Cytotoxic says:

        Flyovistan is only out-sucked by modern California. What a disastrous hellhole.

    • Wolf Richter says:


      I encourage everyone to move to flyover country. It’s nice and warm in the summer, and income taxes are less of a worry because you make less money, and there are lots of other benefits. I keep telling people. I recommend Tulsa, where I used to live. They will even pay you $10,000 to move there if you bring a work-from-home job with you.

      • Apple says:

        Why did you leave?

        • Josh says:

          He’s being sarcastic because he wants more people to move out of SF so it’s less crowded for him.

      • Halibut says:

        That hurts. You know we don’t claim Tulsa anymore than you claim
        Bakersfield. Let’s play fair from now on.

      • Anthony says:

        I guess it’s all about whether you think living in a condo is actually a great life…

        • Wolf Richter says:

          Yes, totally. Lots of people love living in the middle of great cities, surrounded by all they offer — San Francisco, Manhattan, etc. It’s a great life for them. Condos and apartments can be big and gorgeous with panoramic views, if have enough money. Living in a house in the suburbs would be a horror to me. I have no idea why people do that. But lots of people love it. And that’s wonderful. There is something for everyone. And you get to choose.

      • Ed says:

        “Nice and warm in the summer”

        Ha, ha. One side of my family is from the Oklahoma panhandle and the West Texas. My Oklahoma family now all reside in Tulsa suburbs. Let me tell everyone Wolf has his tongue firmly in cheek when he says that. It’s HOT.

      • Wes says:

        When are you moving Wolf?

    • Jason says:


    • tom15 says:

      2M median price. And the 10 %’s are cheering for it to drop down to 1.5M.
      We already have Bill gobbling up thousands of acres for his grasshopper ranches. Before long we will have a tesla parked in front of every moby.

      Before ya know it they will be resurrecting Robin Leach for flyover lifestyles.

      They might survive it….not sure we will.

    • Flea says:

      Don’t tell our secret,hahahahaha

    • Miller says:

      “Admittedly, you’d have to adjust to lower taxes, cheaper gas, less crime, and folks that are way too polite, but you’d survive it.”

      Meh. No dog in this fight as we’ve lived in and have family on both the coasts and flyover country and have found nice things about both, but the list of apparent advantages here comes with a lot of fine print. Lower taxes? No–that’s a myth. Texas for ex. has some of the highest property taxes in the US (if not the world), and a lot of hidden or sneaky taxes in places that you may not be looking out for, esp if starting a business. And traffic and parking tickets in Texas are some of the worst we’ve seen, and the cops can be very aggressive at collecting them. That revenue they don’t get from income taxes has to come from somewhere else–there’s a lot of public costs in Texas and the state isn’t in any way or shape, low-tax. Same with much of the rest of the Midwest or South. The only state that tried to drive taxes to rock-bottom was Kansas about a decade ago, and it ended in complete disaster–the schools, police forces and firehouses couldn’t pay their teachers, cops or firemen, and even the otherwise conservative citizens of the state completely kicked out their government because of it. As for less crime, in some places, in others no.

      I love rural places and small towns don’t get me wrong, but stats show rural America actually has higher crime than urban areas, and much higher rates of suicide and opioid use. And for being polite? Yeah, there may be something to that, but it’s case by case. We’ve been around Texas, Arizona, Oklahoma, Louisiana and Alabama a lot and there are lots of friendly people–and a lot of nasty ones too. On other hand, we’ve met some our best friends in SF, LA and NY. Not saying I disagree on the housing prices, they’re way too high in general and the housing bubble has been esp nasty in those cities. Then again incomes tend to be lower in most states between the coasts, so homes are often unaffordable there too. It’s about the ratio of income to housing costs (rents and purchases), and it’s bad all over the US right now thanks to short sighted Fed policy on ZIRP and QE, only now being corrected.

      • Halibut says:

        Awww… Ain’t no dogs and ain’t no fight.

        Oh, please, monsieur. It is a little game we play. They put it on the bill, I tear up the bill. It is very convenient.

    • MarkinSF says:

      First off San Francisco is not SoCal. Not even close. Next, the recent Court decision to overturn RvW is effectively going to push younger, more intelligent people out of flyover as state governments institute draconian laws that scare the hell out of people. Corporations will be unable to attract top talent in those places. The same can be said for education and government.
      One other point is global warming. The American SE will become a jungle while we’re already seeing the beginning of a rapidly warming world in places like Texas and Oklahoma. This will not abate.
      I guess you get what you pay for.

      • Miller says:

        We were talking about this possibility and it came up in a discussion with some urban planners and political scientists, and it’s true that the latest tendency toward some kooky extremes and draconian laws by the supreme court and some legislatures in those states (Roe v Wade is minor by comparison, they’ve been talking about some ridiculous 19th-century throwbacks) might scare away businesses, festivals and conferences, but there really isn’t much effect on people moving in or out. The media talks that up a lot and it seems to have figured into some wishful thinking by Josh Hawley in Missouri and Ken Paxton, the Lt. Governor in Texas that even most conservatives hate for his arrogance and tone deafness. But the people who actually study this professionally react with a shrug–in the real world, people just don’t give much attention to politics when deciding where to move and live, issues of jobs, economics, affordability, local options and family just take on much more immediate importance. It’s just very hard to move in practice, and these sorts of battleground states like Texas are so big that even when someone does need to move, they can almost always find somewhere else within the state much closer by that suits them.

        Oddly enough to the level this happens at all, I’ve if anything been seeing more of my conservative friends and family leave Texas, if they have the means, than those of progressive persuasion–the more rock-ribbed rural regions are shrinking while the progressive cities are growing fast, and Texas demographically is already one of the most diverse states in the country. The recent fantasy push by some legislatures for undoing the 21st and 20th centuries might have an effect on recruiting skilled people (and it probably will cancel a lot of lucrative festivals and events), but even then I have doubts. One seminar we were in recently mentioned that the overwhelming majority of abortions are done chemically anyway, and between that and much of Texas (esp the urban counties) not even enforcing the unpopular laws, not to mention options in other states, the abortion laws are even less enforceable than Prohibition. And more so for many of the other dumb ideas the legislatures are passing around.

        There are hundreds of thousands of laws on the books of state legislatures that go back centuries, meant for a very different time and culture, and if they drift too far away from the real world and irritate too many people, they just don’t get enforced. It’s likely that when people are thinking about where to relocate for jobs, they’re aware of this and don’t pay too much attention to these legislative pushes going in too crazy a direction. Except to mock them and be motivated to vote by them, which ironically may be the main effect of these laws. Again, Texas has similar demographics to California and very progressive urban centers, the only thing holding it back from going in at least some similar directions like CA (besides gerrymandering and other desperate attempts by the old guard to hang on a bit longer) is just the apathy of progressive Texas voters, almost an epidemic compared to other states. And the extremism in the recent laws and supreme court being out of touch is likely to be the one thing that cures that in 2022 and 2024–with similar effects in Florida, the Carolinas, Arizona and Mississippi. Americans want some level of moderation and common-sense in state legislatures, and with some of them as you say delusional enough to actually pursue such draconian laws, the real-world effect won’t be to make people move out–much more likely is that those bills and the general stupidity surrounding them will fire up opposing voters and raise their turnout, backfiring on the ideologues who obsess over these things.

  15. BrianC says:

    Have definitely seen uptick in inventory and lots of slow to go pending homes in north county San Diego. Some price cuts but overall prices have yet to demonstrably budge just yet.

    Gun to my head I would predict 10-15% price drop. While unpalatable for some that still seems minuscule given the run up.

    Sad truth of it is that instagram culture plus work from home plus Airbnb means the nicer places will weather any downturn better than most.

    • Gattopardo says:

      If all areas were equally priced, yes. In reality, nice areas are bid up much higher, with the same level of crazeballs optimism. So a more uniform decline may happen than you think.

    • Jon says:

      I think San Diego may go down quite a lot more than 10 to 15 %.

      Bunch of my friends here canceled their plan to buy their 3rd or 4th home because of tech stock losses and some were forced to come back to work 😒.

      I remember in 2008 . People said the same thing i.e. come what may San Diego won’t see drastic price draw down but rest is history as we know.

      • TheFalcon says:

        San Diego Case Schiller showed minus 40% last crash.

        • TheOldMan says:

          Yet my north county SD home dropped by 20% at most during last bubble burst

        • MarkinSF says:

          The 40% refers to drop from the peak. If you brought half way up the ladder that would explain the 20% drop. Also think that coastal property like OB PB LJ Encinitas etc. would hold value to a greater degree than inland.

        • TheOldMan says:

          I understand that all. I bought my house in 99. I know exactly what it peaked at ($925K at most in 2005) what it bottomed at ($725K at the lowest in 2009 when I bought half of it back) and what it was worth, at least last month LOL ($2.15M). I fully expect it to go back to somewhere between $1.7 and 1.8 in the next 2 to 3 years. Dont care, not selling. Mortgage with taxes and insurance is $2K less than rent on a 1 BR around me. If I wanted to travel I could rent it for $6 to 7K w/o much ado. If rent dropped to $4k or the value to 1.1M I still wouldnt care. Not going anywhere. Its paradise here in Encinitas

    • The Bob who cried Wolf says:

      So far center city San Diego isn’t seeing the difficult time selling that other places are, unless it’s one of those places that’s less than ideal to sell, even in good times. Inventory is pretty low here. I don’t follow much other than the center city areas, though, so don’t know much of what’s happening elsewhere.
      Also, when folks mock others for saying it’s different this time one has to consider that whether it’s going to end up differently or not doesn’t change the fact that so many variables are different this time. The printed money isn’t just gonna vaporize. Folks buying this time around have substantially better credit and down payments than other bubbles. Single family houses just weren’t and aren’t being built like they were in the last bubbles. Pandemic lockdowns taught folks to have some space. People will fight to keep their low interest loans and not lose their house knowing the alternative is much higher rates. Work from home has brought higher incomes into various areas. I’m sure there are more differences. Each of these points can be nit picked but each of these is a variable quite different than variables of the past. Add to this the variable that hasn’t changed that housing is a hard asset.
      Before I get flamed, understand that I do believe there will be a correction, but a housing collapse like 2008? I don’t think so. Now the one thing that could change all of this is if we exit the recession only because we’re entering a depression…then all bets are off.

      • BrianC says:

        I completely agree with you Bob. Supply and demand always applies (this time is not different). But home supply in coastal CA has barely budged in 10 years. Cheap financing is locked in for many keeping supply low. Supply of buyers skyrocketed during the pandemic.

        In 2019 this site was arguing (with good reason) for a downturn in home prices. I watched the San Diego market and totally agreed. The common mantra was that there simply weren’t enough high paying jobs in San Diego County to support current (at that time) home prices and a downturn was inevitable. Obviously there was a paradigm shift in behavior where that didn’t play out.

        Maybe the laptop class finally gets decimated? Millenial family formation craters from an already low number when its actually supposed to rise? All employees get called back to work and well established professionals have to fall back into a daily commute grind? These are all possible but unlikely at this point.

  16. Jackson Y says:

    Some housing markets doubled in price between 2019 & early 2022, and now that a tiny, tiny sliver of those gains have been walked back, Wall Street & the entire RE industry are screaming for the Federal Reserve to go back to QE & buying billions in MBS every month. If home PRICES (not sales volume) dropped 20, 30 percent, we’d just be back to pre-covid levels. Whoop de doo.

  17. tirekicker says:

    Sorry, I’m not seeing it. Condo in Irvine neighborhood I watch just contracted for $1.2M at 3 bdrm, 1800 sq feet (I’m guessing overseas money). Another condo close by in Turtle Rock has active lookers at $1K/sq ft – $1.8M for 1800 sq feet, listing sort of targeting overseas buyers with talk about Irvine safety and schools. Out further where I am, $2M 3.2K sq ft sold in 7 days.

    I’d like things to be soften, and expected it to happen, but where I happen to be looking in SoCal for prurient interest (I’m not in the market) nothing is happening.

    • Heron says:

      Lol, those of us familiar with Irvine think people have to be brain damaged to pay that much for a condo in the land of the freeway. But I’m happy there are people willing to spend so much of their lives and money on something like that ;)

  18. Elton says:


    Do you think things will move faster due to Zillow effect? It’s a lot easier to see things happening in real time than it was even during 2008. Anyone paying attention can see all the price cuts online and make the assumption that the top is already in.

    • Wolf Richter says:

      That’s an interesting point. The “Zillow effect” might have sped up the price increases, and might do the reverse. But the media has been constantly hyping RE, with their ridiculous stories about bidding wars and amount paid over asking, etc. So I don’t know if the Zillow effect is big enough to have an effect beyond what the media is already doing.

  19. Hernando says:

    Doesn’t really matter what the prices do.

    Last year, if a person bought their house for 875,000 1 year ago at 3% and had a 700,000 mortgage they would:

    1. put down 175,000
    2. With taxes and insurance in CA a 4,100 per month mortgage.

    Today at 6% mortgage the same 875,000 home with 175,000 down would cost 5,363 per month

    The price of the home would have to drop to 675,000 dollars to be around 4,100 per month with the same down at 6%

    Maybe prices will drop 30%, maybe rents too… but that’s a pretty good buffer.

    • AD says:

      Very good post as far as running the numbers. Its all about buying a monthly payment when you buy a home with a mortgage like Patrick Killelea says.

      I remember listening to WBBR (Bloomberg radio) interview economists specializing in real estate and they said for every 1% increase in 30 year mortgage rate, there would need to be about a 10% drop in price.

      I suspect the Fed would like real estate to drop to at least to 10% above early 2020 levels. Its going to take at least 12 to 18 months for that to happen.

      The Fed already took a lot of momentum from the S&P 500 with it recently bottoming to around 3670 compared to the pre-pandemic all time high of 3380 in February 2020.

      I don’t understand why the S&P 500 has gone up so much recently.

      • Einhal says:

        Because all the talking heads are convinced (and are betting accordingly in the bond markets) that the Fed reverses and starts lowering rates and printing again in the next 4 or 5 months. If they do, inflation goes further out of control, so I don’t really see how they can do that.

  20. OutWest says:

    Still gotta have the big bucks to live a good life in California. I spent a few years there and enjoyed it emensly…

  21. Ghassan says:

    Redfin CEO says he has never seen faster drop in investor activity in housing market. This explains the sudden explosion in inventories in investor friendly markets like Phoenix. As wolf has been saying for a while now, second house and flipper houses or shadow inventory as wolf calls it coming out of woodwork…. Although Not in the northeast unfortunately.

    • AD says:

      That makes sense if the homes are that much of a liability such as there is a loan associated with the property (and even if earning some money via Air BnB, etc.).

      There may be panic selling as they try to unload their property, and at worse break even.

      I suspect that is based on the financial well being of the real estate investors and if they can hold onto the property for at least 7 years, and lease it out short term / vacation, or long term.

  22. Double D says:

    I’m glad we sold our house last year in Antioch and got the hell out of California for good. You can never really time anything like a market top, so best to be on the conservative side and get out when we did. And boy are we glad that we did. Filed the last of our taxes taxes for 2021 & it’s adious MF’s. Nevada has its warts but it’s night & day compared to the gulag.

  23. nightdipper says:

    Pre 2008 no income verification mortgages where very common. Point is a lot of folks that walked away in 2008 were weak borrowers and already had poor credit so it was easy to walk away. Since then credit standards for mortgages tightened significantly and I don’t think there is a boat load of mortgage holders that will walk away during this down turn. At least not nearly as many as 2008. Note anyone that walked away in 2008 missed out on the value more than doubling the pre 2008 peak value (where I live).

    • B.A.C.A.H. says:

      Yeah you’re right nightdipper: a huge cohort of NINJA cannot buy anymore, like they could late in the last runup of house prices.

      No more such Buyers Of Last Resort.

      “It’s Different This Time.”

  24. David Hall says:

    San Francisco was once the most overpriced city in America – price/income. California cities are still among the most overpriced in America. The Chinese got in on buying California real estate years ago, driving up property values.

    China is having its own real estate catastrophe. There are 10 million foreclosed homes. Many homeowners have stopped making payments.

    • SoCalBeachDude says:

      There are 1.4 BILLION people in the People’s Republic of China. The mortgage boycott involves LESS THAN 1% OF HOMEOWNERS THERE and is relegated to those people who purchased unfinished construction projects and are waiting for them to be built and is of little big picture concern.

      • Isaac S. says:


        re “The China mortgage boycott involves LESS THAN 1% OF HOMEOWNERS THERE … and is of little big picture concern”

        right…that is the CCP cover story… where have I heard that before? Sub-prime? Lehman? GFC 1? The Titanic staring at the top 1% of the (Ponzi/Pyramid scheme) iceberg?

  25. unamused says:

    “Vacant homes in San Francisco are such an issue that people are trying to put a proposition together for a vacant-home tax and get it on the ballot.”

    OpieT: ‘Google “vacant homes San Francisco”. 40,000 units estimated to be empty.’

    A sure sign that the SF housing market is manipulated on the supply side to send prices to the moon and keep them there.

    Contriving shortages is an old monopolist trick. There’s a lot of that going on these days. Blackstone is known to do this with residential real estate in a number of markets. And a lot of the nation’s laws are rigged to enable it, and not just in the housing market.

    There are reasons why conventional market forces do not function as advertised. Mister Market isn’t stupid but he can be taken for a fool.

    • DanS86 says:

      Yeah, gamble buying. When the tide turns these owners will Sell Mortimer Sell.

    • Cytotoxic says:

      “There are reasons why conventional market forces do not function as advertised.”

      Yes, because bad governments and other coercive elements won’t let it. The only ‘monopoly’ SF has is the one that plagues so much of the world: NIMBYism. Let people build and they will come.

      • unamused says:

        “bad governments”

        It is to be regretted that the rich and powerful too often bend the acts of government to their own selfish purposes.

        – Andrew Jackson

        And here you thought it was teacher’s unions.

        “The only ‘monopoly’ SF has is the one that plagues so much of the world: NIMBYism.”

        SF is plagued with financialization. As if you didn’t know.

  26. CCCB says:

    Theres still time to sell. You just have to price property right – meaning what seems LOW. That low price today may seem high in the future.

  27. CreditGB says:

    Did you say median income of $119k in the same area with median real estate value of >$2million? How does that work??

    Can you break down that poor SOB’s median $119 k after tax income and budget? And now with highly inflated food, energy and transportation costs soaking up way more budget, how does this guy survive much longer?

    Yours Truly, Dazed and Confused but so far, living within my means.

    • John Galt says:

      It’s the same story from SF to San Jose. There are a select group of tech workers that earn way more than the mean or median income, but the homeowner that you’re referring too is at least 40 years of age, and has owned a home since 2014-15 or earlier. I know of very, very few folks in the 35 year old range and younger who had the money to purchase before the latest runup, and I’ve worked with lots of young professionals earning in that 100-150k range. They CANNOT afford 2+ million dollar homes. I’m 33 and can’t either. Demographics are a b!tch and they will catch up to this market, eventually. Or we will all just leave California.

  28. Kunal says:

    Nasdaq is still almost 50% up from pre pandemic levels. Wages are also up significantly compared to pre pandemic levels. So what’s the rationale behind RE falling below pre pandemic levels.
    There will be minor single digit correction but don’t expect Bay Area RE to go below 2019 levels. In 2019 people were also predicting Bay Area RE crash and didn’t buy, well they must be licking their wounds now.
    This dip is a great opportunity to buy, you will be thankful in the long run. On the other hand, waiting for even bigger correction will cause more pain and you will repent. Even Warren Buffet is on a buying spree.

    • Wolf Richter says:

      You’re just relentless :-]

      At first, you were the tapering-denier here, along with some others. No, the Fed will never taper, and when it started tapering, it was, no the Fed will never end QE. And then, you became a tightening-denier; no, the Fed will never raise rates, and then, the Fed will never shed assets and do QT, and now, home prices in the Bay Area will never drop more than just a tad….

      After a while, this gets to be hilarious. But I’m not sure if you can see the humor in it.

      • Miller says:

        “After a while, this gets to be hilarious. But I’m not sure if you can see the humor in it.”

        My thoughts too. And Kunal is hardly the only one stuck in these delusions. “This time it’s different!” “Home prices will never drop!” “The Fed will never tighten, the PPT will always be there!” After a point it just becomes unintentional comedy.

    • The Falcon says:

      Kunal did you catch a ride here from 2006 with Doc and Marty in the DeLorean?

      All is well, it’s just an itsy bitsy lil ol gully! LOL.

  29. Michael Engel says:

    1) US yield curve is flattened. All rates between the 2y and the 20Y
    are inverted. The “deepest” hump is US10Y.
    2) US10Y – US3M might be more important. It’s weekly disconnected bars entered Mar/ Nov 2020
    congestion, found support on July 27 2020 close.
    3) The 10Y-3M opened a huge gap between Feb 24/ Mar 2 2020, while SPX inside bar led us to Mar 2020 bottom. Options :
    4) Option #1 : if Feb 24/Mar 2 2020 gap will be closed, under minus
    (-)0.14, or under Aug 2019 minus (-)0.52, we are in recession.
    5) Option #2 : inflation might carry 10Y-3M higher well above May 2 2022 high @2.27, because US10Y will takeoff to : 5%-7%, while the front end, the 3M, will be hooked to Fed rates.
    6) Negative US treasuries rates will cont for years, deflating US gov debt and RE in real terms.

  30. Rentier says:

    I believe the government should be involved in the real estate market the way they do this in fuel business – if the currency is loosing power and prices going out of control, they should take measures, and I mean not the interest rates, I mean taxes and restrictions.

  31. L. Clifton says:

    “Normalizing” that’s cute. The problem with California is that people are moving out faster than they’re moving in. The entire culture and politics of that state must change because people are fed up with liberalism, sky-high taxes, crime wave after crime wave, open borders, and squalid homeless encampments in their ‘hood..

    • Wolf Richter says:

      I always encourage people like this to move to Texas or Oklahoma. It’s way too crowded and congested here, even after the population decline. Those folks would be happier in OK and TX. People need to live where they’re happy, not where they’re unhappy.

      • Miller says:

        Oklahoma maybe, though Texas not anymore, at least not for the conservative-minded. The state has changed radically in the past 20 years even though media perceptions haven’t caught up, I’ve had a lot of very conservative-leaning friends and relatives leave Texas in frustration because TX is becoming “too liberal and diverse” or some variation on that. Even if the rural areas are rock-ribbed, they’re shrinking and the fast-growing metros are very progressive, not far off from their West Coast counterparts. And the demographics in Texas are fairly similar to California. The only thing keeping TX from following CA in most ways are the old dinosaurs still clinging to power in Austin, gerrymandering and (more than anything) a long history of voter apathy among the more progressive voters. But the conservatives in power may have shot themselves in the foot this time by getting a bit too radical and crazy with their latest legislation, ironically the one thing that’ll actually cure the apathy of voters in TX for 2022 and 2024 and get them to turn out in droves.

        • Turtle says:

          It will be hilarious if Beto wins the Governor’s race. Abbott is hardly even campaigning. Ted Cruz made that same mistake last time and lost to Beto by less than 3%. Beto has made a career of losing one race after another but he’s going to win at some point because these dinosaurs in Austin think they’ve got it in the bag. They take our votes for granted.

          Too bad the liberal powers that be in California are not so apathetic.

        • Turtle says:

          Correction: Beto lost to Cruz by less than 3%.

          Hate politics. Used to love it. But’s driven me mad. Third party, anyone? How about 20 parties!?

  32. joe2 says:

    Who cares what the crazy people in California do.

  33. AwokenLBC says:

    Why are homebuilder stocks rising like mad in midst of this is the question

    • Wolf Richter says:

      Because you’re not actually looking at the charts. Homebuilder stocks are WAY DOWN so far this year. The biggest, DR Horton is down 28% YTD. Compared to the S&P 500 down 17% YTD.

Comments are closed.