Home Prices Dropping Except In At Least One Place

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Home prices are now posting the biggest monthly declines since January 2009, according to the latest Mortgage Monitor report from Black Knight.

Median home prices in August fell 0.98%, only slightly better than July’s 1.05% monthly decline. The average home price is down 2% ($8,800) from its June peak nationally as we enter the historically slower fall-winter homebuying season.

The housing market has not seen such a significant two-month drop in prices since shortly after the in winter of 2008, Black Knight said on Monday.

Skyrocketing mortgage rates – now in the 7% range for some buyers – and limited inventory have driven mortgage affordability to its lowest levels since the early 1980s, a reversal from the frenetic boom in buying during 2020 and 2021.

With mortgage rates at 6.7% as of Sept. 29, it takes 38.2% of the median household income to make the monthly mortgage payment on the median-priced home bought with a 30-year mortgage and 20% down, Black Knight said. That monthly payment is up $930 from August 2021, a 73% increase.

With home borrowing costs now more than double from what was seen last year, potential home buyers can now afford less of a house size. Redfin reports that the typical home buyer has seen the size of a home fall by 100 square feet on average. Redfin cites this example: A San Diego homebuyer with a $3,000 monthly budget can afford a 931-square-foot home at today’s 6.7% mortgage rates, down from the 1,366-square-foot home the same buyer could have purchased a year ago, when rates were sitting near record lows at 3%.

In Orange County we are experiencing a unicorn market. Home prices are not going down. They are either stabilizing or still going up in some places. It’s hard to buy in Orange County but that is why we are here to make this an easier process on you and your family.

But everywhere else in California, we are seeing the worst declines:

Here’s the math from Black Knight –

San Jose: July prices were 10% off their peak (the largest dip of the 50 metros).

San Francisco: 7% off the peak (No. 3 dip).

San Diego: 6% off the peak (No. 4 dip).

Los Angeles-Orange County: 4% off the peak (No. 5 dip).

Sacramento: 3% off the peak (No. 7 dip).

Riverside-San Bernardino counties: 3% off the peak (No. 8 dip).

The other top drops were Seattle (8%), Denver (4%), and Portland and Phoenix (3%).

And what Case-Shiller shows …

San Francisco: Off 1.3% June vs. May (the second-largest drop of the 20) — first dip in 24 months.

San Diego: Off 0.7% in a month (No. 3 dip) — first dip in 32 months.

Los Angeles-Orange County: Off 0.4% in a month (No. 4) — first dip in 30 months.

The other drops: Seattle (1.9%), and Portland and Phoenix (0.1%).


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