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By Giulia Carbonaro
Senior Reporter
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While national house prices have dipped only modestly during the first few months of 2023, as the housing market had what experts called a correction phase, they have dropped much more dramatically in the cities of San Francisco, Austin and New Orleans.
The Zillow Home Value Index (ZHVI), which tracks the typical home value and market changes across the U.S., shows that home prices in the Californian city, as of November, had dropped by 12 percent since reaching their peak in 2022.
Homes in San Francisco, which for decades has been one of the most overvalued and most expensive urban areas in the country, reached a peak of $1,461,529 in May 2022, according to Zillow. The average home value there is now much lower at $1,234,246; the city was hit harder than others by the affordability crisis afflicting homebuyers and by issues unique to the City by the Bay, including an exodus of major retailers from its city center and the impact of remote work.
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In the pandemic boomtown of Austin, home prices plunged by an even more staggering 19.3 percent since reaching their peak in 2022; while, in New Orleans, they dropped by 13.1 percent within the same timeframe, according to the latest ZHVI data.
Data analyzing changes between November 2022 and November 2023 show a slightly different but similar picture, with two of the same three cities being the ones with the steepest price declines, but in different order. New Orleans had the most dramatic decrease in value, at 9 percent year on year, followed by Austin with an 8.2 percent drop and San Antonio, Texas, with a 3 percent decline.
Home values in San Francisco have somehow already started to bounce back, with the city reporting a modest 0.2 percent growth in prices between November 2022 and November 2023.
The situation in these cities is different from the rest of the U.S., as these were some of the most overvalued markets in the country, which exploded during the pandemic. In the rest of the U.S., the modest correction that followed the skyrocketing of home prices in the summer of 2022 started being reversed in spring 2023, when prices started climbing back in many cities across the country.
The ZHVI showed that home prices are up year-over-year in 38 of the country's 50 largest housing markets, including San Diego (7.6 percent year-on-year), Boston (7.2 percent), Philadelphia and Miami (6.5 percent).
The average home value in the U.S. is $346,048 as of November 30, according to Zillow, up 2.2 percent year on year. In March, values had dipped to $335,523, only to start climbing back the month after. Home prices in the U.S. have been on the rise since then.
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