Luxury home prices slide, making multimillion-dollar homes look cheap

Bargain-hunting in the Bay Area? 

Yep. The Bay Area had three of the four hardest-hit high-end housing markets in the nation, with San Francisco leading the way with an almost 13% tumble during the second quarter compared to the same period a year ago, according to Redfin. The online real estate company considers the top 5% of homes sold as the luxury market.

Oakland and San Jose’s luxury home prices plummeted 11% and 10%, respectively, for the same year-over-year comparison. Seattle had the second-largest decline at 12.3%. (See table below for details on California markets.)

And high-end buyers – many able to pay with cash – are taking notice. San Francisco and San Jose luxury home sales were down a modest 4% and 13% compared to second-quarter 2022.

The Bay Area’s double-digit drops are getting deep-pocketed buyers into the housing market – and into a shopping mood. While luxury home sales in other parts of the state, from Sacramento to San Diego, were off more than 20% compared to a year ago. 


It has become a tale of two luxury markets in the Golden State. 

In areas where prices have barely budged in either direction – like the 3% decline in Los Angeles or the 1.6% increase in San Diego – sales have plunged, following the rest of the market.

But in areas with double-digit declines, sales have dropped at a much smaller rate.  

“High mortgage rates are prompting many middle-income homeowners to stay put, but wealthy homeowners can often afford to move even if it means taking on a higher rate and monthly payment,” says Redfin chief economist Daryl Fairweather. “Wealthy buyers are also more likely to pay in cash, meaning they’re less likely to be deterred by elevated mortgage rates.”

Plus, the stock market has rallied in recent months and concerns over a recession are easing, making higher-end consumers more likely to spend, even on multimillion-dollar homes.

Nationwide, luxury home prices increased 5% during the second quarter compared to a year ago, and sales were off 24%, the smallest decline in the past year.

“Normally when the housing market is hurting, it’s the luxury market that’s hurting the most by far, but today’s market is unusual because there isn’t a recession,” Fairweather says. “While a lot of high-end homebuyers remain on the sidelines, many of the ones who are in the market are still willing to spend big.”

Feature photo: A home in Santa Monica/SHUTTERSTOCK

CityMedian sale priceSale price vs. a year agoHomes sold vs. a year ago
Anaheim$3.9 million+3.9%-29.3%
Los Angeles$3.4 million-2.9%-36.2%
Oakland$2.8 million-11.1%-28.9%
Riverside$1.35 million-3.4%-24.5%
Sacramento$1.48 million-4.5%-20.8%
San Diego$3.2 million+1.6%-26.6%
San Francisco$4.8 million-12.7%-4.0%
San Jose$4.3 million-10.3%-12.8%

Source: Redfin

Redding, Fresno and Sacramento had the largest increase in foreclosures during the past year. SHUTTERSTOCK

Foreclosures more than double in California

Foreclosures are back, sort of. 

More than 17,900 homes in California entered some form of the foreclosure process – default notices, scheduled auctions or bank repossessions – during the first half of the year, a 9.6% increase compared to the same six-month period last year and up 136% from two years ago.

Redding, Fresno and Sacramento endured the biggest jump in foreclosures at more than 170% compared to two years ago, according to ATTOM Data. Los Angeles had the smallest increase at 103% for the same comparable period. 

Only one California city had a red flag when it came to foreclosures: Modesto. The Central Valley city had 4.3 of every 10,000 homes in foreclosure, one of the highest percentages in the U.S.


The end of the federal government-mandated foreclosure moratorium established during the early days of the COVID pandemic is the primary reason for the large increase in foreclosure notices, says ATTOM Data CEO Rob Barber.

Bottom line: Mortgage servicers weren’t allowed to foreclose on many homes during the pandemic, and they could start the legal – and often lengthy – foreclosure process in late-2022. So, the first half data from two years ago is a more accurate comparison.

But while the percentage gains might grab attention, the overall number of homes at any step in the foreclosure process is a fraction compared to a decade ago. There were more than 340,000 homes in California in foreclosure during the first six months between 2008 and 2010, including a record 391,600 in 2009, according to ATTOM Data.

(The post continues after the table) 

Foreclosures triple in Redding, double elsewhere in the first half compared to 2021

CityForeclosures in the first half of 2023Compared to the first half of 2021
Los Angeles5,301+103%
San Diego1,130+129%
San Francisco1,737+134%
San Jose1,599+113%

Source: ATTOM Data


Nationwide, almost 185,600 homes entered foreclosure during the first six months of 2023, a 185% increase compared to two years ago. Again, a mere blip compared to the 1.65 million homes in 2010.

But the bump in foreclosures is worth watching.

“Foreclosure activity across the United States maintained its upward trajectory, gradually approaching pre-pandemic levels in the first half of 2023,” Barber says. “Although overall foreclosure activity remains below historical norms, the notable surge in foreclosure starts indicates that we may continue to see a rise in foreclosure activity in the coming years.”

But with many homeowners in California boasting near-record equity, most could sell their homes and enjoy a hefty profit, allowing them to avoid foreclosure and the loss of their investment.


However, more recent homeowners who may have bought at the peak of the market could be struggling. 

A federally funded, state-managed program helps homeowners in California affected by the COVID pandemic to catch up on their mortgage payments and property taxes and remain in their homes.   

In February, the California Mortgage Relief Program increased the amount of funding per household to $80,000 – including for those who have been helped previously by the program – and for homeowners with loan deferrals since January 2020. The free program will help homeowners who have missed at least two mortgage payments or one property tax payment before March 1, 2023.

The program’s goal is to ensure homeowners affected by the COVID-19 pandemic can remain in their homes. The assistance does not need to be paid back. 

Homeowners must meet income requirements based on their county and the number of adults in the house to qualify for the California Mortgage Relief Program. The income limits are 150% of the county’s area median income – or about $143,000 for a two-adults household in Los Angeles County or $195,000 in San Francisco. (check income limits in the chart on the right).

Income limits for two-adult households for mortgage relief program
CountyIncome limit
Los Angeles$151,350
San Diego$165,400
San Francisco$223,000
Santa Clara$214,100

Source: California Mortgage Relief Program

The program has assisted 19,600 homeowners, awarding almost $506 million – or about half of the available funding.

“We urge all homeowners to review their eligibility and consider applying to join the many thousands who have already taken advantage of the program to stay in their home,” says Rebecca Franklin, president of the California Housing Finance Agency (CalHFA) Homeowner Relief Corp. “Even now, too many homeowners are still struggling to recover from the financial toll of the pandemic. This adjustment could mean that more families will not only save their house, but their home. At the same time, they will also protect their greatest financial asset and build generational wealth that could extend beyond their lifetime.”

Seven of 10 renters in California say their personal finances are “poor” or “fair.” SHUTTERSTOCK

Renters are worried about high housing costs and inflation

California renters are financially stressed and many are worried. A lot.

While many homeowners have enjoyed double-digit annual gains and some have easily doubled their investment in recent years, most renters of apartments and single-family homes are struggling, according to a recently released report from the Public Policy Institute of California.

The nonpartisan group found that 69% of renters – basically seven of 10 people – said their personal finances were “fair” or “poor,” compared to 33% of homeowners. 

And 40% of renters – two of every five people – said they are worse off financially today than a year ago compared to only 26% of homeowners.


Renters have been battling fast-rising housing costs, especially during the first year of the COVID pandemic, and the highest inflation since the Reagan administration. The additional costs are creating a financial hardship for many renters, according to the survey of about 1,600 families.

A large majority of renters in California are cost-burdened, spending at least 30% of their household income on housing. And many are severely cost-burdened, with half of their income spent on housing.

California’s renters, many of who have benefited from healthy pay raises, are still hurting financially. Even more affordable cities – such as Bakersfield, Fresno and Visalia in the Central Valley and Riverside in Southern California – have become tough for many renters, with rents up at least 40% since the pandemic started in early 2020, according to Zillow.

While apartment renters are concerned about housing and other costs, only 15% of homeowners are worried. 

Homeowners have enjoyed cheap money with near-record-low mortgage rates until early spring 2022, when the Federal Reserve started hiking interest rates to fight inflation. Many of those homeowners are considered equity rich – with more equity than debt based on the current market value of their home – and have locked-in rates and the same monthly mortgage payments.

Of course, with higher mortgage rates, more homeowners are stretched financially – and stressed. Most new homeowners’ mortgage payments are at least $4,000 with the current interest rates, more than double compared to 18 months ago.