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Home value falling in America

Time for big city living in the US?

01.07.19

Home values are falling the fastest in America’s priciest cities, according to the latest monthly report from Redfin on Thursday.

Only six of the 85 largest metro areas in the U.S. saw median sales prices fall in May, starting with San Jose, the exceedingly expensive seat of California’s Silicon Valley, where prices fell to $1.175 million, down 6% compared to last May. The half-dozen high-end cities where prices fell are exceptions to the broader housing market, which has largely picked up in response to declining mortgage rates.

The second-steepest fall was in greater New York City—where a slowdown, particularly in luxury sales, has plagued the market for the last two years. The Big Apple saw its median sales price tick down 2.5% in May, by Redfin’s calculation.

Prices also declined 2.2% in the pricey second-home market of Honolulu, where the median home traded hands for $584,000 last month.

Back in California, house prices also ticked down slightly in Orange County, Los Angeles and up north in Oakland.

Home values have trended down in a number of high-tax metro areas over the past two years, partly an effect of U.S. tax reform enacted Jan. 1, 2018, which lowered the maximum mortgage interest deduction and chopped the amount of state and local income tax deductions down to only $10,000.

Some of the slowdown in coastal metros follows years of rapidly rising prices, which have soared since the last recession.

Outside of those areas, the U.S. housing market saw fairly strong price growth in May. The median home across 85 U.S. cities was $315,700, an increase of 3.6% compared to last year, the highest annual growth rate in seven months. Meanwhile, the number of sales nationwide was flat, as a broad shortage of available homes continues to impede sales growth.

Knoxville, Tennessee, recorded the highest price growth of any city in the index, soaring 15.2% in May compared to last year. Milwaukee, Wisconsin, came in second with prices jumping 14.7%.

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