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This is where the prices of “overpriced” homes fall the most


How much have housing prices fallen? As with most things in real estate, the key is location, location, location.

Single-family home prices have fallen an average of 2.2 percent since their peak in July, according to Moody’s Analytics’ home price index released last week. The decline has not been evenly distributed: Homes in many East Coast cities and states with less expensive homes have mostly held their value, while some expensive West Coast metro areas have experienced double-digit declines.

Home values ​​have soared amid extremely low mortgage rates in the pandemic era and high demand for telecommuting space. Since then, values ​​have suffered something of a hangover since their peak last summer.

Mortgage rates have risen as a result of the Federal Reserve’s anti-inflation rate hikes, driving many potential buyers out of the market and reducing demand.

The average rate offered on a 30-year mortgage has doubled since the start of 2022 and was 6.43% last week, according to mortgage giant Freddie Mac. Rising prices during the pandemic, combined with higher interest rates, have pushed the typical monthly mortgage payment on a new home to $2,060, up from $1,204 before the pandemic hit, according to data from the Mortgage Bankers Association.

“The US housing market is struggling to find its footing as low affordability erodes demand,” economists at Moody’s Analytics wrote in a note. “The most expensive segment of the market has been hit the hardest, with the sharpest declines concentrated in inaccessible and overpriced West Coast markets.”

Indeed, home prices took the biggest beating in some of the country’s most unaffordable markets. Home prices in metro San Francisco, where a single-family home costs an average of $1.4 million according to real estate website Redfin, have fallen 13.16 percent from their peak, according to Moody’s.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.