Let’s politely say that a lot has changed in the housing market since the Federal Reserve ended its cheap-money policies years ago.
Consider the dramatic evaporation of home appreciation, with every state seeing smaller gains since 2022 than in the previous four years. My trusty spreadsheet tells the tale, reviewing Federal Housing Finance Agency price index data for the 50 states and the District of Columbia.
Higher mortgage rates made homes harder to afford and shrank buyer budgets. Plus, as pandemic worries faded, the mad dash for bigger homes and homeownership cooled.
Job growth lost steam, which meant fewer people were out shopping for homes. And with a flood of newly built apartments, renting started to look like the smarter money move.
The big chill
Look at price gains over the last four years through mid-2026, and you’ll see appreciation has been relatively tame.
California shows an average annual price gain of 1.9%. That was the seventh-smallest among the states and trailed the nation’s 3.1% rate of gains.
It’s no California quirk. Ponder the state’s chief rivals: Texas gains were the fourth-slowest at 1.5% per year, while Florida ranked sixth-slowest at 1.6%.
The slowest four-year pace of increases were found in the District of Columbia at 0.2%, Colorado at 0.8%, and Oregon at 1.5%.
Even the fastest gains seem mild: New Jersey was up 5.6% annually since 2022, Connecticut 5.4% and New York 5.2%.
The boom years
Now, stack those small gains against the previous four years, when pandemic-era economic chaos and rock-bottom mortgage rates sent prices soaring.
California home prices surged at a 9.5% annual pace in the four years ending in the second quarter of 2022. That jump was the 11th smallest gain. U.S. prices were rising at an annual rate of 11.3%.
The top gains were seen in Idaho, which averaged 16.5% annual increases. Florida was at 15.1% and Arizona at 14.6%. Texas was No. 19 at 11.5%
How hot was it? Even the U.S. laggards saw noteworthy gains: the District of Columbia averaged 4.6% per year, Louisiana 6.4% and North Dakota 6.7%.
How slow?
Compare the gains of these two periods, and you find that California’s home appreciation pace has slowed by 80%.
No, prices didn’t fall 80% – the rate of gains did, sliding to 1.9% from 9.5%. Please note this drop is only the 13th-largest cooldown among the states.
Nationally, recent price gains were 73% less than the previous four years.
The biggest drops in appreciation rates were in the District of Columbia, off 95%, Colorado, off 92%, Florida, off 89% and Texas, off 87%.
The smallest drops? West Virginia, off 32%, Illinois, off 39% and North Dakota, off 47%.
Leader to laggard
California home gains have mellowed to a back-of-the-pack position among the states.
That’s bad for bragging rights. It’s better for affordability. And it’s a huge status change.
Think about the period between 1975, when the FHFA data starts, and 2018. That’s when the affordability problems were brewing as California home values appreciated at an annual rate of 7.54%.
That gain was No. 1 among the states and well above the nation’s 5.9% annual pace. Yes, California was once America’s home appreciation king in an era when the state economy grew at top-of-the-charts speed.
Next for annualized gains over these 43 years were the District of Columbia, up 7.5% a year, and Washington state, up 7.4%.
Texas was No. 35 at 5.3% a year, as Florida ranked No. 29 at 5.5%.
And the slowpokes? West Virginia and Mississippi both averaged 4.2% gains annually.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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