Fast forward to today, and supply is still low, whilemaking it more expensive for prospective home buyers. That means housing markets that have a supply of relatively affordable homes, such as Buffalo, NY and Hartford, Connecticut, have seen steady price gains.
But in areas of the market that were already suffering from sky-high home prices, like in San Francisco and Los Angeles, there has been room for home prices to fall. Andthat are mostly concentrated in West Coast cities has removed potential buyers from the market and has likely sparked an uptick in homes for sale.
To be sure, West Coast home prices had room to fall after experiencing dizzying gains over the past decade. Home prices in San Francisco soared 112% between 2012 and 2020, nearly doubling the national gain of 58% during that same time period, according to data from S&P Dow Jones Indices. The pain seen in West Coast housing prices might take time to spread to the East Coast, if it does at all, given that the supply of homes remains extremely limited. At the same time,that could help keep any future price declines limited.
That's as long as mortgage rates don't surge even higher. The average 30-year fixed mortgage rate was at 6.42% last week, well below its one-year high of 7.08%, according to data from Freddie Mac. That represents some relief for prospective home buyers.