In San Francisco, the median price of single-family houses dropped by 8.5% in July from June, and by 14.1% from a year ago, to $1,460,000 million, according to the California Association of Realtors today.
In the 16 months since the peak in March 2022, the median price has plunged by 29%, or by $600,000 (red line).
The three-month moving average (3mma), which irons out some of the monthly ups-and-downs of median prices, fell by 2.6% in July from June and was down by 23.1%, or by $474,500, from its peak in May 2022 (green line).
Housing market downturns are slow-moving. Prices don’t plunge overnight, as you’ve come to expect from cryptos. Housing market downturns take years to play out. Housing Bust 1 started in different markets at different times. In San Francisco, the median price peaked in May 2007. Nearly five years later, in February 2012, it bottomed out, having dropped 31% from the peak.
Housing Bust 2 started after the peak in May 2022. May was month zero, and we’re now in month 16 of this downturn.
So we started comparing the Housing Bust 2 in San Francisco against Housing Bust 1, in terms of the percentage drop from the peak.
In 2007, the median price peaked in May; in 2022, it peaked in March. So we’re off by two months, which adds some seasonality to the mix. But we’re using the 3mma for both periods, which irons out some of the seasonality.
So we find:
- HB 2: In month 16, the median price 3mma was down 23.8% from peak
- HB 1: In month 16, the median price 3mma was down 13.6% from peak.
- Both experienced a sucker rally of three months that started in month 10 for HB 1 and in month 12 for HB 2, providing lots of false hopes.
- The rally was steeper in HB 2, after prices had dropped a lot faster.
- After three months, both rallies died and prices headed south, extinguishing the false hopes.