Real Estate

Analysts predict San Francisco Bay home prices could fall

A respected analyst warns San Francisco bay area: Housing is overvalued, especially in this cooling real estate market.

Mark Zandi, chief economist at the respected firm Moody’s Analytics, said: told Fortune in a report released Wednesday The San Francisco Bay Area housing market is too expensive, though not as fast-growing as the rest of the country.

Moody’s “assess whether local economic fundamentals, including local income levels, are sustainable relative to local housing prices.”

According to Moody’s Analytics data, home prices in the San Francisco-Oakland-Berkeley area (as compiled by Moody’s Analytics) are overvalued by 11.4%. Other areas, widely considered the Bay Area, have lower or similar percentages, with the exception of Vallejo, where home values ​​are overvalued by nearly 20%.

Outside of the Bay Area, home values ​​are reportedly skyrocketing, especially in areas with an influx of residents. In the Santa Cruz Watsonville area, housing is overvalued by nearly 36% of him. Also in Reno, prices are 39% higher than he expected. Needless to say, Boise, Idaho and Austin, Texas had overestimations of 72% and 61%, respectively. (In Boise, home prices have already come down, according to the Fortune Note.)

These “overvalued” numbers don’t necessarily mean prices will fall, Fortune explains. However, when the housing market is not booming, as it has been in 2022 so far, local housing markets where home prices have risen significantly (25% or more) will typically experience significant price declines.

So what does that mean for the Bay Area, where overvaluation is less severe? San Francisco’s active home listing price cuts are already up nearly 200%, according to Compass. and, July Redfin Report suggests that the Bay Area housing market is cooling faster than anywhere else in the country.

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