2 Bay Area cities among top 20 ‘most valuable’ U.S. housing markets
California again has the most valuable housing market in the country, and six of the top 20 most valuable metro areas are in the state — including San Francisco and San Jose in the Bay Area, according to a new report from real estate website Zillow.
Zillow defines total housing market value as the sum of the value of each home. California’s more than $10 trillion value makes up nearly 20% of the national total of just under $52 trillion, according to Zillow data as of June 2023. Florida follows at nearly $4 trillion, surpassing New York, now third at $3.6 trillion, for the first time. Rounding out the top five are Texas and New Jersey at $3.3 trillion and $1.8 trillion, respectively.
California, the most populous state in the country, also has the most housing units of any other state. And those units are very expensive — only Hawaii has a higher average home value than California.
“That combination of lots of homes and those homes being very expensive is the reason California’s housing market is the most valuable of any state by far,” a Zillow spokesperson said.
And homeownership in the state is increasingly out of reach. A study published earlier this year by the UC Berkeley Terner Center for Housing Innovation found that homeownership in California is declining, especially among younger Californians, and that the gap between the percentage of Californians who own their home and the percentage of homeowners nationwide continues to grow — trends fueled by Californians’ inability to afford buying a home.
Orphe Divounguy, a Zillow senior economist, noted that nationwide, a surge of new construction helped drive growth in the nationwide housing market value. But in California, the number of housing units has only grown by 0.6%, compared to a 1.7% nationwide increase, which means new construction did not play as much of a role in California’s high housing market value, the Zillow spokesperson explained.
And despite topping the most valuable list, California’s housing market value has decreased slightly since June 2022, when the nationwide housing market value peaked before a slight downturn later in the year. While the nationwide housing market value climbed 2.2% since then, California’s decreased by 3.3%. The only other state in the top five most valuable to see a decrease since last year is New York, whose housing market value decreased by 0.2%.
That decrease is also seen in the California metro areas that rank in the top 20 most valuable housing markets. Los Angeles, the second most valuable market in the country at $3.7 trillion, stayed essentially the same as June 2022, with an increase of just 0.1%. San Francisco, the third most valuable market in the country, saw its value, now $1.8 trillion, drop by 8.8% since the summer 2022 peak. That’s compared to New York, the most valuable housing market in the country at $4.2 trillion, which saw an increase of 4.2%.
Following San Francisco is No. 4 Boston at $1.3 trillion, a 3.4% increase from June 2022. The top four most valuable metros have remained largely unchanged for the last five years, the Zillow report said. But the fifth most expensive is a new entrant: Miami, valued just slightly below $1.3 trillion, an increase of 8.6% since June 2022.
The other California metros in the top 20 were San Diego at No. 9, San Jose at No. 11, Riverside at No. 14 and Sacramento at No. 19.
California’s real estate market, especially in expensive areas like San Francisco, was hit very hard by rising mortgage rates, which caused would-be sellers to hold onto their homes instead, priced out some potential buyers and pushed inventory levels to their lowest in 20 years. The slowed market, combined with remote work changing what people look for in a home, contributed to the price declines in expensive areas like San Francisco and San Jose, Zillow senior economist Jeff Tucker previously told the Chronicle.
In contrast, markets in Florida have gained among the most value since June 2022. That growth has been fueled by large population growth pushing up new construction, as well as the increased competition for existing homes that helped raise home values, the Zillow report said.
Reach Danielle Echeverria: [email protected]; Twitter: @DanielleEchev
