Home Values In 2 SMC Cities Cooling More Than Most

REDWOOD CITY, CA — More than a dozen California cities saw typical home values drop by double-digits over the last year and dozens more are part of a widespread cooling trend for real estate, according to new data.

The investment firm SmartAsset analyzed Zillow's Home Value Index, tracking the fluctuation in values for single-family homes, condos, and co-ops from May 2022 to May 2023.

Researchers found Bay Area homes experienced the most dramatic drops in the nation, claiming the top four spots on the list. Dublin comfortably led the pack with a whopping 15.4 percent decline in typical home value, shedding nearly $230,000. San Francisco was second, where values tumbled 13.3 percent.

Some parts of the Peninsula saw some significant movement, too, led by San Mateo. Prices there tumbled just over 12 percent — ranking eighth nationally — and the typical home was valued at $1.5 million in May, down about $200,000 over the year. Redwood City also made the top 25, shedding $166,000, 9 percent.

The changes were a little less pronounced in SoCal, but several cities still posted substantial drop-offs. The Southland's biggest declines were seen in Santa Monica, dipping 7 percent and ranking 41st overall, followed by Simi Valley and Burbank at 6.2 percent, just outside the top 50.

Here Are The U.S. Cities Where Home Prices Are Cooling Most

1. Dublin, CA (-15.37%)
2. San Francisco, CA (-13.3%)
3. Palo Alto, CA (-12.82%)
4. Fremont, CA (-12.77%)
5. Kirkland, WA (-12.37%)
6. Oakland, CA (-12.22%)
7. Pleasanton, CA (-12.11%)
8. San Mateo, CA (-12.01%)
9. Bellevue, WA (-11.99%)
10. Redmond, WA (-11.61%)

While the lower price point is welcome news for prospective buyers and a nightmare for owners, experts say the cooldown isn't a good sign for the market, noting that overall housing inventory remains tight. One expert told Bay City News that in some areas the declines may be linked more to lower demand as people leave for places with a lower cost of living after years of ballooning prices left homes out of reach.

In the Bay Area, data from the California Association of Realtors found the median price for a single-family home surged 36 percent between 2020 and 2022. The SmartAsset report noted that, despite recent declines, home prices in places like Palo Alto remain "atypically expensive."

"We prefer to see housing prices go down because of supply increases," Corey Smith, executive director of San Francisco's Housing Action Coalition, told Bay City News. "We need to be trying to build as much housing as we can so the supply increases are ultimately the things that drive down prices."

There are some signs that things may be starting to move in that direction.

In May, the state Department of Finance said new housing growth reached its highest level since 2008. The same report found that Alameda County — home to many of the cities with significant price drops — had some of the highest housing growth in California.

Smith told Bay City News he was optimistic about the coming years, citing the state's growing focus on affordable housing and recent legislative efforts to streamline new affordable projects, which took effect last month.

Bay City News contributed to this report.