San Francisco Home Prices Are Far Out, Man

Last week, the Federal Housing Finance Agency released its quarterly home price indices for the fourth quarter of 2015, so we now have a 41-year time series for every state and many metropolitan areas. The numbers show that, even after adjusting for inflation, housing prices in the San Francisco Bay Area have exceeded prices during the peak of the housing bubble.

The data show that prices are also rising for some metro areas, such as Houston and Dallas, that didn’t bubble in the 2000s (see chart below). However, this increase is due to higher incomes in those areas; the home value-to-income ratios have remained about the same, while those for the metro areas in the above chart have increased from the post-bubble crash. Austin’s increase is partly caused by strict regulation in the city, though many of its suburbs remain affordable.

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