After experiencing a decline due to mortgage rate hikes, home values in most of California’s major cities have rebounded in 2023. However, in San Francisco and Oakland, property values continued to decline.
In December 2023, the average home value in San Francisco experienced a decline of 5.6%, dropping from $1.29 million to $1.22 million. San Francisco experienced the largest decrease in value compared to other populous cities in California, based on data from Zillow. This decline marks the lowest December value for San Francisco since 2017. In Oakland, there was a significant decrease of 4% in home prices, dropping from $800,000 to $768,000.
Home values in Berkeley and San Mateo experienced relatively minor declines from 2022 to 2023, compared to other cities in the Bay Area. In contrast to the overall trend in California, average home values in certain areas experienced a decrease, while the statewide average saw a 3.3% increase, reaching $743,000 from $720,000.
Zillow strives to provide an estimation of the value of the average home in a given area, which may vary from the overall market prices of homes.
Home Prices Changed in California Cities
Home values in the South Bay and its surrounding areas experienced significant increases, particularly in large cities. In December 2023, San Jose experienced a significant increase in average home values, rising by 6.6% from $1.24 million to $1.32 million. The values in Fremont and Santa Clara saw comparable growth.
According to real estate agents, the demand for homes in that particular area of the Bay Area has remained robust. This is particularly true as certain tech companies have mandated their employees to resume working from the office.
Home values in Southern California suburbs, like Irvine, experienced a significant increase of 11.3%, going from $1.22 million to $1.35 million. In a significant development, California’s largest cities have experienced a substantial increase.
The increase in this city was the second-highest among the 100 largest cities in the United States, with only Knoxville, Tenn. experiencing a higher jump of 11.7%.
Home Prices Changed in Major US Cities
San Francisco experienced a significant decrease in home values, ranking fourth among the largest cities in the United States. The cities with larger drops were Austin, Texas, New Orleans, and Memphis. Oakland experienced a significant decrease, ranking as the sixth-largest decline.
In December 2023, San Francisco maintained its position as one of the cities with the highest home values, despite experiencing a decline from the previous year. It held the third-highest value among the largest cities in the United States. According to data from Zillow, California dominates the list of cities with the highest home values, with Irvine and San Jose taking the top spots.
Despite a recent dip in home values for certain cities in the Bay Area, the overall trend of appreciation over the past decade remains unchanged. The average value in the San Francisco metropolitan area nearly doubled from $574,000 in 2013 to $1.1 million in 2023.
Home values continue to lag significantly behind their peak in mid-2022, a period marked by intense competition fueled by low mortgage rates and limited housing supply. Despite economists’ consensus that the return of low interest rates is unlikely in the near future, real estate agents are optimistic that recent decreases are enticing more buyers to enter the market, resulting in an increase in property values.
Other California cities have surpassed San Francisco’s home values, as the market in the city hasn’t experienced the same elevation. In December 2022, San Francisco found itself ranked ninth in terms of typical home value among large cities in California. It was surpassed by cities like Fremont and Santa Clara. By the conclusion of 2023, it ranked as the 13th most valuable, with Irvine and San Jose surpassing it in the city rankings.