by Wolf Richter, Wolf Street:

House prices dropped again – and ironically the most in San Francisco and Silicon Valley.

In the San Francisco Bay Area overall, house prices dropped again in July compared to July last year. They dropped in eight of the nine counties on a year-over-year basis: Silicon Valley (Santa Clara and San Mateo), San Francisco, Marin, the Wine Country of Napa and Sonoma, and the East Bay (Alameda and Contra Costa). The only county where house prices ticked up year-over-year was in the least expensive county, Solano.

The drops pushed the median house price for the Bay area 3.1% below where it had been in July 2018, and 9.5% below the peak in May 2018, according to the final data by the California Association of Realtors (C.A.R.). The median price is now back where it had first been in June 2017:

Sales volume of houses in the SF Bay Area ticked down 0.6% in July from the already depressed levels a year ago.

“The market will continue to be challenged by an overarching affordability issue, especially in high cost areas such as the Bay Area, which requires a minimum annual income well into the six figures to purchase a home,” the CAR’s report said.

In California overall, there is now a bifurcation: Condo prices are already falling on a year-over-year basis, and house prices are still rising. The median condo price in California fell 3.1% in July compared to a year earlier. But the median house price rose 2.8%.

The median house price by major region other than the Bay Area, in July year-over-year:

• Central Valley and Inland Empire: Biggest gains in the least expensive regions: + 5.2% and + 4.1% respectively.


• Central Coast: -2.0%.


• Los Angeles metro + 2.8%.

But some parts of the Bay Area are starting to have a wild ride. This is a vast region with a population of nearly 8 million people, separated by the various Bays. The big convoluted body of water with just a handful of infamous bottle-neck bridges has a hefty impact on congestion and commute times, and therefore on the dizzying magnitude of home prices. These prices get less dizzying the more time the commute to San Francisco and Silicon Valley takes during morning rush hour.

San Francisco

In San Francisco and in Silicon Valley, house prices were supposed to explode, fueled by the lowest mortgage rates in nearly three years and by the IPO billionaires and millionaires from Uber, Lyft, and other companies that would suddenly be buying homes, a time-honored real-estate hype that had been proven wrong before (here is my take: Why the Wave of Mega-IPOs Won’t Bail Out the San Francisco & Silicon Valley Housing Bubbles). And little by little, the results are trickling in.

Read More @ WolfStreet.com