Home values in the San Jose metro market fell faster than in any other major urban area in the country, the Silicon Valley Business Journal reported.
The average home value in the area covering Santa Clara and San Benito counties saw its value drop by 3.3 percent from October to November, according to a new report by Zillow. By contrast, nationwide the value of homes fell 0.2 percent over the same period.
While the city itself saw values stay about the same from October to November, areas outside of San Jose weighed down the market’s average, according to the report.
“We’re seeing the markets that are either the most expensive or those that grew the fastest during the pandemic slowing the most right now,” Matt Kreamer, Zillow spokesperson, told the Business Journal.
The national average mortgage rate hit 6.9 percent in October, a 20-year high. Those rates discouraged sales in November, with the rise disproportionately impacting areas that are traditionally some of the hottest markets in the country.
As high mortgage rates make it less affordable for residents to buy homes, buyers are forced to either pay more, shop for less-expensive homes or opt out altogether, Kreamer said. Additionally, with fewer people buying, sellers have to start lowering prices to close deals.
The fall of home values should be expected, according to Kreamer. During the early parts of the Covid-19 pandemic, values were rising rapidly at unsustainable levels, he said. What’s happening now is a kind of balancing out, where prices are going back to where they would have gone if not for the pandemic boom.
“There’s still a lot of room before home values could fall enough to eat fully into those pandemic gains,” Kreamer said.
Not only is the San Jose metro first in home value decline from October to November, but it also tops the nation in value decline from its peak. The typical home in the San Jose region peaked at nearly $1.7 million in April, making it the priciest area in the country. That value has fallen 10.6 percent since then, the report said. Following second-place Austin, San Francisco came in third with its value down 9.5 percent from its peak.
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San Francisco
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