The West Coast has been home to some of the hottest housing markets in the country over the last five years, with Denver, San Francisco, San Jose, Los Angeles, and Seattle leading the way in home price appreciation.
But various pieces of housing data in the fall started indicating that maybe home prices had finally been pushed beyond people’s capacity to pay. First, homes started lingering on the market longer. Then the number of homes on the market started spiking dramatically. Throw in an increase in the number of price concessions, and it looked more and more like price drops are next.
And now, new data from Realtor.com offers the clearest sign yet that home price relief might finally be on the way for prospective homebuyers on the West Coast. Median listings prices—which is the middle price of all the real estate listings currently for sale—in markets across California, Colorado, Washington, and Oregon saw year-over-year declines in November, and when listings prices are lower, sale prices usually follow suit.
The largest active listings median price drop in November came in Denver, where the drop was just shy of 12 percent, followed by Salinas, California, at 7.31 percent, Boulder, Colorado at 6.24 percent, and Santa Rosa, California, at 6.17 percent. These dips reflect realtors’ belief that homes will begin selling for less than they did a year ago.
Will that pan out? The next key piece of data to look at is active listings counts, or the number of homes for sale in the market. When more houses are for sale, buyers have more choice for what to bid on, and sellers have fewer prospective buyers to pit against each other and start a bidding war. Higher listings counts are also a sign that home prices might drop.
Among the markets that showed lower median listings prices in November year over year, San Jose had the highest jump in active listings year over year by a whopping 160.3 percent. Median listings prices dropped 3.67 percent year over year in San Jose, which has been among the markets with the highest home price appreciation since the financial crisis.
Denver also saw a huge spike in active listings year over year at 122.9 percent. Santa Rosa jumped by 64.1 percent. San Francisco, where listings prices dropped by only 0.61 percent, saw a 58.3 percent jump in active listings year over year.
While listings prices are a leading indicator, not much sales data has come out that show actual home price drops. The most recent home sales data from ATTOM Data Solutions, a leading real estate data provider, is from October, and it shosw all these markets continuing to see solid growth, including by double-digit percentages year over year in some markets.
But according to November data from Compass cited by the business blog Wolf Street, condo sale prices in San Francisco prices dropped by 2.5 percent, although the figure did not include newly built condos. This could be the first in a number of reports that West Coast home prices are starting to come down.
While it hasn’t happened yet, much of the data in these markets points to it happening soon.