From the “Mansion Shortage” in AI-bubble-epicenter San Francisco infecting mid-tier home prices, to Austin and Oakland where prices plunged over 25% since 2022.
By Wolf Richter for WOLF STREET.
In 27 of the 33 big and expensive cities we track here, mid-tier home prices in March were down from their respective peaks in prior years, led by Austin (-26%), Oakland (-25%), and New Orleans (-19%).
Now also filtering into these mid-tier home prices is the “mansion shortage” in San Francisco, the epicenter of the AI investment bubble. Total employment in the city dropped and the unemployment rate ticked up. But a relatively small number of super-highly paid people get hired by AI companies, and they’re chasing down expensive homes, and there aren’t enough expensive homes for sale, and so they throw easy-come-easy-go money around in the realm of mid-tier homes and drive up their prices. Despite the recent spike in mid-tier home prices, they’re still 11% below the all-time high of 2022. By contrast, prices dipped in San Jose, where mid-tier homes are even more expensive than in San Francisco.
For one of the 33 cities, Boston, the jury was still out for March. April 2025 was the all-time high, and in March 2026, prices were down year-over-year by just a hair, and down by 1% from the high in April, but this is too close to call.
And in five of the 33 cities, prices rose to new highs in March, seasonally adjusted: New York City, Chicago, Philadelphia, Minneapolis, and Omaha. But price increases have been much slower than in the crazed free-money days of 2021 and 2022.
In the two years between mid-2020 and mid-2022, all of these cities had seen huge price spikes, some of which qualify for “price explosions”: Austin +62%, Phoenix +60%, Fort Worth +50%, Raleigh +49%, and Sacramento +39%.
Those price explosions were fueled by the Fed’s reckless free-money policies, which included trillions of dollars of purchases of Treasury securities and mortgage-backed securities, which led to the below-3% mortgage rates, even as inflation was raging at the time toward 9%, which led to crazed FOMO buying behavior at the time. Those price gains came on top of the already outsized price gains in the prior years.
The price measurement here is the seasonally adjusted three-month-average mid-tier Zillow Home Value Index (ZHVI) for single-family homes, condos, and co-ops, released today. Mid-tier means the middle-third by price in each market. The ZHVI is based on millions of data points in Zillow’s “Database of All Homes,” including from public records (tax data), MLS, brokerages, local Realtor Associations, real-estate agents, and households across the US. It includes pricing data for off-market deals and for-sale-by-owner deals.
To qualify for the list of the 33 most splendid housing bubbles, the city must be one of the largest by population and be among the expensive cities where the ZHVI for all mid-tier homes must have been at least $300,000 at some point.
Some cities that are large enough don’t qualify for this list because the ZHVI for all homes never reached $300,000, despite the surge in recent years, such as the cities of New Orleans, Houston, Philadelphia, Memphis, Oklahoma City, Tulsa, Kansas City, Cincinnati, Pittsburgh, etc.
But Houston, Philadelphia, New Orleans, and Omaha are included anyway: Houston and Philadelphia because they’re the fourth-largest and sixth-largest cities in the US; New Orleans because it got within a hair of $300,000 in 2022; and Omaha, because it’s within a hair of $300,000 now, and is thereby the most expensive big city in the center of the US.
The 33 Most Splendid Housing Bubbles.
In the little tables, MoM = month over month; YoY = year-over-year. The column furthest to the right shows the percentage increase “since 2000.” All seasonally adjusted.
| Austin, TX, City, All Homes, Prices | |||
| From Jun 2022 peak | MoM | YoY | Since 2000 |
| -26% | -0.5% | -5.7% | 155% |
Lowest since March 2021.
| Oakland, City, CA, All Homes, Prices | |||
| From May 2022 peak | MoM | YoY | Since 2000 |
| -25% | -0.2% | -8.5% | 246% |
Lowest since October 2017.
| New Orleans, LA, City, All Homes, Prices | |||
| From Jun 2022 peak | MoM | YoY | Since 2007 |
| -19.1% | -0.1% | -3.2% | 106% |
Lowest since February 2020.
| Washington D.C., All Homes, Prices | |||
| From Jun 2022 peak | MoM | YoY | Since 2000 |
| -12% | -0.3% | -2.9% | 258% |
| San Francisco, CA, City, All Homes, Prices | |||
| From May 2022 peak | MoM | YoY | Since 2000 |
| -11% | 0.8% | 5.0% | 226% |
The “Mansion Shortage” infects mid-tier home prices.
| Denver, CO, City, All Homes, Prices | |||
| From Jun 2022 peak | MoM | YoY | Since 2000 |
| -11% | -0.6% | -4.3% | 200% |
| Phoenix, AZ, City, All Homes, Prices | |||
| From Jul 2022 peak | MoM | YoY | Since 2000 |
| -10% | -0.1% | -2.7% | 250% |
| Fort Worth, TX, City, All Homes, Prices | |||
| From Aug 2022 peak | MoM | YoY | Since 2000 |
| -9% | -0.1% | -2.8% | 189% |
| Portland, OR, City, All Homes, Prices | |||
| From May 2022 peak | MoM | YoY | Since 2000 |
| -9% | -0.2% | -1.1% | 217% |
| Atlanta, GA, City, All Homes, Prices | |||
| From Jun 2022 peak | MoM | YoY | Since 2000 |
| -8% | -0.1% | -3.8% | 140% |
| Sacramento, CA, City, All Homes, Prices | |||
| From July 2022 peak | MoM | YoY | Since 2000 |
| -8% | -0.1% | -2.5% | 286% |
| Jacksonville, FL, City, All Homes, Prices | |||
| From Nov 2022 peak | MoM | YoY | Since 2000 |
| -7% | 0.2% | -3.1% | 204% |
| Seattle, WA, City, All Homes, Prices | |||
| From May 2022 peak | MoM | YoY | Since 2000 |
| -7% | -0.3% | -2.3% | 230% |
| Dallas, TX, City, All Homes, Prices | |||
| From May 2024 peak | MoM | YoY | Since 2000 |
| -6% | -0.2% | -3.6% | 215% |
| Tampa, FL, City, All Homes, Prices | |||
| From May 2024 peak | MoM | YoY | Since 2000 |
| -6% | 0.1% | -3.5% | 312% |
| Orlando, FL, City, All Homes, Prices | |||
| From Jun 2024 peak | MoM | YoY | Since 2000 |
| -5% | -0.1% | -3.5% | 241% |
| Nashville, TN, City, All Homes, Prices | |||
| From July 2022 peak | MoM | YoY | Since 2000 |
| -5% | -0.4% | -3.0% | 214% |
| San Diego, CA, City, All Homes, Prices | |||
| From July 2024 peak | MoM | YoY | Since 2000 |
| -4% | 0.0% | -3.2% | 348% |
| San Jose, CA, City, All Homes, Prices | |||
| From Jan 2025 peak | MoM | YoY | Since 2000 |
| -4% | -0.6% | -2.5% | 341% |
| Honolulu, HI, City, All Homes, Prices | |||
| From Jun 2022 peak | MoM | YoY | Since 2000 |
| -4% | 0.1% | 0.3% | 207% |
| Raleigh, NC, City, All Homes, Prices | |||
| From July 2022 peak | MoM | YoY | Since 2000 |
| -4% | 0.0% | -2.3% | 149% |
| Houston, TX, City, All Homes, Prices | |||
| From Jul 2022 peak | MoM | YoY | Since 2000 |
| -4% | -0.2% | -2.9% | 154% |
| Los Angeles, CA, City, All Homes, Prices | |||
| From Dec 2024 peak | MoM | YoY | Since 2000 |
| -3% | -0.4% | -1.4% | 327% |
Prices in the city of Los Angeles, despite three years of wobbling up and down, are back where they’d been in March 2022.
| Las Vegas, NV, City, All Homes, Prices | |||
| From June 2022 peak | MoM | YoY | Since 2000 |
| -3% | -0.2% | -2.7% | 177% |
| Miami, FL City, All Homes, Prices | |||
| MoM | YoY | Since 2000 | |
| -3% | 0.1% | -2.0% | 342% |
| Salt Lake City, UT, All Homes, Prices | |||
| From July 2022 peak | MoM | YoY | Since 2000 |
| -3% | -0.2% | 1.6% | 241% |
| Charlotte, NC, City, All Homes, Prices | |||
| MoM | YoY | Since 2000 | |
| -2% | 0.0% | -1.3% | 168% |
| Boston, MA, City, All Homes, Prices | ||
| MoM | YoY | Since 2000 |
| 0.2% | -0.4% | 266% |
| Omaha, NE, City, All Homes, Prices | ||
| MoM | YoY | Since 2000 |
| 0.0% | 1.2% | 151% |
| Minneapolis, MN, City, All Homes, Prices | |||
| MoM | YoY | Since 2000 | |
| 0.1% | 1.4% | 197% | |
| Philadelphia MSA, All Homes, Prices | ||
| MoM | YoY | Since 2000 |
| 0.0% | 2.0% | 273% |
| Chicago, IL, City, All Homes, Prices | ||
| MoM | YoY | Since 2000 |
| 0.4% | 2.8% | 115.9% |
| New York City, NY, All Homes, Prices | ||
| MoM | YoY | Since 2000 |
| 0.6% | 4.5% | 239% |
In case you missed it: Single-Family Home Sales Drop Further into Deepfreeze, Supply Hits 10-Year High, Condo Sales Plunge to Record Low
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As a mid 30’s young professional, what is one supposed to do? Finally at the point where we have stable, well paying jobs and savings to put towards a home. Yet, prices have shot up over the last few years and it appears buying now may result in several years of slowly decreasing prices.
Yet, renting places you at the whim of your landlord and may mean living in a smaller, apartment unit in the years we would like to have more space for potential children.
Rent a house and give yourself the right to renew your lease each year for 3-5 years with a cap on rent increases. Lots of landlords would love to have you as a tenant. You’d get a sizeable rent discount because landlord has 12 most occupancy and a bigger discount if are handy enough to fix small items on your own.
Buying a house is a big decision. The fear is that price will go down especially in market like now. I suggest to look for desirable properties; the ones with curb appeal and are easier to sell. And always budget for the unexpected. Repairs can quickly add up. If there’s nothing in your price range, rent and keep adding to the savings for your down payment. Don’t buy a condo unless the HOA budget is flush with reserves. Special assessments can quickly add up draining you of cash. Amenities also cost a lot to maintain and exposes you to service inflation that is stubbornly high as Wolf points out time and time again. You don’t want HOA dues going up 5-10% a year.
My own experience was ok. I lucked out buying at the bottom twice now, but I bought with expectation I would live in the home and possibly lose money. I remember struggling to secure a large down payment and loan in 2009. It was scary back then, but worked out. Having a good stable job helped ease the worry. Best of luck to those taking the plunge.
It’s going to take a big catalyst to make houses affordable.
That catalyst could be any number of things.
The only constant is change, so who knows that will be the change.
Things can change a lot in 5 years.
Looks like most markets have plataued. I feel it will take a corection of 20% with lower rates before buyers will jump back in the market. Unfortunately with the amount of debt piling up globally and inflation well above target, long term rates don’t appear to be dropping significantly any time soon.