Analysts predict San Francisco Bay home prices could fall

A respected analyst warns the San Francisco Bay Area. Homes are overvalued, especially in this cooling real estate market.

Mark Zandy, chief economist at the esteemed firm Moody’s Analytics, told Fortune in a report released Wednesday that the housing market in the San Francisco Bay Area is not as fast-growing as the rest of the country. No, but said it was overpriced.

Moody’s “assess whether local economic fundamentals, including local income levels, are sustainable relative to local housing prices.”

According to Moody’s Analytics data, home prices in the San Francisco-Oakland-Berkeley area (as compiled by Moody’s Analytics) are overvalued by 11.4%. Other areas, widely considered the Bay Area, have smaller or similar percentages, with the exception of Vallejo, where homes are overvalued by nearly 20%.

Outside of the Bay Area, home values ​​are reportedly skyrocketing, especially in areas with an influx of residents. In the Santa Cruz Watsonville area, housing is overvalued by nearly 36% of him. Also in Reno, prices are 39% higher than he expected. Needless to say, Boise, Idaho and Austin, Texas had overestimations of 72% and 61%, respectively. (In Boise, home prices have already come down, according to the Fortune Note.)

These “overvalued” numbers don’t necessarily mean prices will fall, Fortune explains. However, when the housing market is no longer booming, as it has been in 2022 so far, local housing markets with significantly higher home prices (over 25%) will typically experience significant price declines.

So what does that mean for the Bay Area, where overvaluation is less severe? San Francisco’s active home listing price cuts are already up nearly 200%, according to Compass. And his Redfin report in July suggested that the Bay Area housing market was cooling faster than anywhere else in the country.

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