California Housing Market Plunges to All-Time Lows; 40% in Some Cities

By: Stephanie Bontorin | Last updated: Apr 18, 2024

The red hot California real-estate market has finally cooled down. 

Unfortunately, the reduction in home price means that many sellers have slashed the price on their homes by as much as 40% in an attempt to unload their property. 

San Francisco Is Becoming Less Desirable

In one shocking example, a home in Oakland, California, just outside of tech-hub San Francisco, experienced a depreciation of almost one and a half million dollars. 

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As reported by Newsweek, a home in the Bay Area went from $4.1 million in March of 2022 to being sold for $2.55 million in present day. 

Reductions in Some Places Aren’t Working

Although the beautiful home had a reduction of more than $1.5 million, it has still been sitting on the market without much interest. 

A row of 1920s style homes in San Francisco

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A real estate agent in the area, Matt Castillo, noted that the house has been on sale for more than 60 days despite the dramatic price cut.

Interest Rates Have Slowed Down Home Buying

As with many areas in the nation, California has felt the heat of the interest rate hikes over the past year. 

A small house with light blue exterior and a brown roof with a well maintained lawn and landscaping

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With lenders increasing the average mortgage to 6% or 7% interest, many new buyers simply can’t afford to enter the market

Real Estate Agents Going out of Business

California has the third-highest number of realtors in the U.S. They sit just behind Florida and Texas: two states that also share the same real estate frenzy.

A white house with black shutters and flower planters

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Due to the dramatic reduction in home buyers in the past year, many agents have had to hang up their hats or close their practice altogether.

Property Tax Rates Are Also to Blame

Another common bill for homeowners has drastically changed the ability for many people to continue to afford their house: property taxes. 

A white Spanish style house with flowers in the garden beds and a well manicured lawn

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In the past year alone, the average property tax bill has skyrocketed 125.3%. The average bill in 2022 was $26,319. Today, that bill sits at a staggering $59,307. 


The Tech Sector Has Played Its Part in the Reduction

While many tech companies used to call San Francisco and the Bay Area home, many have left the state or shuttered their doors completely.

A man wearing a red and blue plaid shirt works on a laptop with a notebook and a cell phone next to him

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Companies have also been affected by the rise of A.I programs. This tool has made many jobs in the tech space obsolete.


California’s Home Prices Are Still Historically High

While the recent changes in property ownership has slowed down the market and caused some home sellers to take a loss, the state still has record high prices on houses. 

A small white house with a worn roof and pumpkins on the porch

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During an average year, the home price in California still rises about 5.6%.


How the Housing Crisis Affects Sales

Due to the fact that there is a major housing shortage all around the United States, homes are still selling, even when prices remain unaffordable. 

A large blue house in a vintage architectural style

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People seem to re-shuffle themselves according to where they can afford to live and what they can afford to buy. The changes mean that only the people who can afford to buy homes in California will end up there, while locals will be priced out. 


Affordable Housing Is Growing too Slowly

In many states, building affordable housing for families is one of the top priorities. 

An aerial view of LA showing apartment buildings, palm trees, and mountains in the background

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California still seems to lag behind in this respect. They plan on building only 106,000 new homes in the coming year. But this number is not enough to keep up with the population increases. 


The Best Time to Buy for Motivated Buyers

For anyone in the financial position to buy a home in the Golden State, now is the time.

A young couple stands in the living space of a nice home

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With house prices being slashed more by the day, sellers will start to become desperate to get the home off their hands. 


The Market Is Expected to Bounce Back in 2024

Although the initial slump has caused a lot of fear for homeowners in the first portion of the year, the rest of 2024 will look different. 

An aerial shot of a suburban area showing houses on empty streets

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The small amount of inventory will be the driving force keeping the market competitive