“Crash, correction or chill” looks at economic and real estate trends that give hints about how deep housing’s troubles may be.

Buzz: California house hunters should be mildly encouraged that prices in three major markets are well off their springtime peaks – though housing values are still quite inflated from pre-pandemic days.

Source: My trusty spreadsheet reviewed Case-Shiller’s November home price indexes that track 20 big U.S. markets, including three in California. It’s a widely watched benchmark that’s essentially a three-month average of values. This yardstick compares pricing from sales of individual existing single-family homes vs. measures such as those that track median sales prices.


Case-Shiller confirms bargains exist across California, bringing modest relief to budget-strapped folks dreaming of homeownership.

San Francisco prices are off the most from their top of the 20 cities tracked by this math.

Bay Area values fell 14% from May 2022 and are off 2% over 12 months – the only yearly loss among the 20. Prices are at a 17-month low but over three years there’s still a 26% gain.

San Diego had the No. 3 drop in prices – off 10% from May’s all-time high, but up 5% over 12 months. November pricing was the cheapest in 10 months but shoppers navigate a market where there was a 46% gain in three years.

And in Los Angeles and Orange counties, prices are down 7% from the May top – the No. 6 drop. Prices fell to a nine-month low. but stand up 4% over 12 months and 36% higher over three years.


The house hunter’s other challenge is last year’s rising mortgage rates. The historically cheap money that inflated values in the pandemic era became history.

Rates soared from 3.45% to start 2022, rising to 6.9% in October, effectively slashing borrowing power. As a result, affordability headaches crushed California single-family home purchases to a 16-year low, according to a California Association of Realtors index.

Now, there’s been some rate relief through January, as home-loan rates have fallen to 6.27%. Does that create more “affordability” – or simply firm up prices? That remains to be seen.

Crash, correction or chill?

What do pricing patterns suggest about the next twist for the house hunt …

Crash? This argument would focus on August to November when all 20 U.S. markets had month-to-month losses. Previously, across-the-board declines had occurred only 13 times since 1991.

And the last time there was a longer losing streak like this was the six months ending in February 2009. You know, back in the Great Recession’s bubble bust.

Or a mere correction?  Look at December’s local median selling prices from CoreLogic, and you’ll see L.A. prices are 10% off their April peak and O.C. prices are down 11% from their May top.

Attention, house hunters; There’s been additional discounting through at least the end of the year!

Just a chill? Yes, Case-Shiller’s 20-city composite index shows U.S. home prices are off 5% from the June 2022 peak. But the 20-city composite still sits 7% above November 2021.

And U.S. prices are 38% above what was being paid three years ago.


The other 17 market results, ranked by drop from their price tops …

Seattle: Off 13% from May’s peak but up 1% over 12 months. Three years? 41% gain.

Phoenix: Off 8% from June peak but up 6% over 12 months. Three years? 60% gain.


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