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A majority of U.S. households has seen home values slip over the past year, and the Bay Area is among the regions feeling the sharpest pullback, according to new research from Zillow.
Nationwide, 53% of homes are now worth less than they were one year ago — a jump from just 14% in 2024 — marking the highest share of annual declines since 2012, when the post-recession housing slump was nearing its end.
The slowdown is hitting hardest in parts of the West and South, especially in high-cost metros and regions that saw the fastest pandemic-era growth. In the San Francisco metropolitan area, which includes San Francisco, Alameda, Contra Costa, Marin, Napa, and San Mateo counties, more than 80% of homes have lost value from last year. In the San Jose Metropolitan area, which includes Santa Clara and San Benito counties, the figure is 78%.
According to the report, average home values have fallen about 15% from their peak in the San Francisco metro area and 10.3% in San Jose — sharper declines than the national average of 10%.
Still, Zillow researchers emphasize that few homeowners are actually losing money when they sell. Most properties are still worth far more than they were purchased for.
“Homeowners may feel rattled … but relatively few are selling at a loss,” said Treh Manhertz, senior economic researcher at Zillow. “Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we’re seeing now is a normalization, not a crash.”
Long-term gains remain strong
While recent declines are notable, the report stresses that losses are still rare: Just over 4% of homes are worth less than they were when they last sold, a smaller share than before the pandemic. The typical U.S. owner has lived in their home for about 8.5 years and has seen its value rise 67%.
In the Bay Area, those gains are even more dramatic, due in part to owners living in their homes longer and chronic inventory shortages.
Homeowners in the San Jose metro area have seen values climb 97% since they last purchased their property, typically around 2012. Property owners in the San Francisco metro area have experienced gains of about 65% over roughly the same period.
Peninsula breakdown
While Zillow’s report doesn’t provide a look at the subtleties of the region’s smaller markets and neighborhoods, historic data shows that prices have soared across the Peninsula since the typical owner last purchased their home around 12 to 13 years ago. Menlo Park’s median home value has jumped an estimated 69%, up from $1.3 million; Los Altos’ has jumped about 113.8%, up from $1.8 million; and Mountain View has seen its home values rise approximately 53% from $1.1 million. In Palo Alto, values have risen about 68% since 2012, when the median home sold for $1.7 million.
Overall, median home values have held steady or risen in most Peninsula cities over the past year. In Palo Alto, the median now sits around $3.5 million; a slight 0.8% increase, according to Zillow, though Redfin data shows a 2.2% decline. (These figures reflect point-in-time snapshots and can vary by source based on timing and methodology.) Several neighboring communities posted gains compared to the same time last year: Menlo Park’s median climbed 4.1% to $2.68 million, Los Altos rose 2.1% to $4.3 million, and Portola Valley jumped 6.6% to $4 million. Mountain View was one of the few exceptions, with its median home value slipping 2.3% to $1.9 million, per Zillow.
“Even in ‘up’ local markets, submarkets and individual homes can lose value. And in local ‘down’ markets, some homes will hold their value better than others,” the report states.
A city’s median home value, according to the experts, can rise even as more individual homes lose value. That happens when higher-end properties appreciate — often due to demand for larger homes and limited inventory — while lower-priced homes slip because higher interest rates are squeezing affordability. In these cases, luxury gains pull the median up despite declines at the bottom.
What the numbers mean
Most homes nationwide have fallen about 10% from their peak value — more than the tiny dips of 2022, but similar to pre-pandemic norms and nowhere near the 27% peak declines seen during the housing crash in early 2012, the report shows.
But what matters most, Zillow notes, is what happens between sales. Only 3.4% of new listings nationwide are priced below what the sellers originally paid, a strong sign that most homeowners are not being forced into losses.
On the Peninsula, the recent value dips highlighted in the report aren’t expected to shift the market. A chronic shortage of homes — compounded by owners hanging onto low mortgage rates — is keeping inventory tight and prices elevated. At the start of this fall, local agents reported that the AI-fueled wealth surge has drawn a new wave of luxury buyers. In Los Altos, 12% of home sales closed at least $1 million over asking, and nearly one-third sold for $500,000 or more above list price in the year’s first eight months. Neighboring Palo Alto set a new benchmark in ultra-luxury sales this year. The city recorded 18 sales above $8 million as of the end of August. Of those, 13 sold during the first half of the year, the most ever in a six-month period.
