Where are California’s most-volatile home prices?

“Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.

Buzz: The Inland Empire is home to California’s wildest home-price swings.

Source: My trusty spreadsheet tallied annual changes in home values in seven big California markets, as calculated by Federal Housing Finance Agency indexes dating to 1978. Rankings tracked four factors: the gap between best and worst years; the share of down years; a geeky measure of price-swing variations called “standard deviation;” and the 44-year average price gain. The final grade was an average ranking of these four yardsticks.


As California housing seems headed toward a price correction in 2023, it’s time to see what history tells us where large gyrations in home values happen the most frequently in the state.

The housing market of Riverside and San Bernardino counties took the top spot because it was No. 1 in all four volatility yardsticks. The Inland Empire’s housing market has an up-and-down history due the region’s fast-growth and erratic economic history.

Next came the Sacramento metro area, followed by Los Angeles, Orange and San Diego counties, then the San Jose and San Francisco metro areas.


Let’s look inside the rankings to see how values within these markets have varied since 1978.

No. 1 Inland Empire: There’s a 57 percentage-point gap between the biggest gain of 29% in 2004 and the largest loss of 28% in 2008. This market suffered down years 30% of the time, with a typical 10.6 percentage-point variation in year-to-year price swings. Local prices have gained an average 5.8% a year.

No. 2 Sacramento: The metro area’s 45-point gap between its biggest gain of 25% in 1978 and the largest loss of 20% in 2008. Down years 25% of the time. A 9.8-point price-swing variation. Average gain of 6% a year.

No. 3 Los Angeles County: A 43-point gap between its biggest gain of 26% in 2005 and largest loss of 17% in 2008. Down years 30% of the time. A 9.5-point price-swing variation. Average gain of 6.3% a year.

No. 4 Orange County: A 44-point gap between biggest gain of 26% in 2004 and the largest loss of 18% in 2008. Down years 25% of the time. A 9.1-point price-swing variation. Average gain of 6.1% a year.

No. 5 San Diego County: A 42-point gap between biggest gain of 25% 2004) and the largest loss of 17% (2008). Down years 27% of the time. A 8.8-point price-swing variation. Average gain of 6.2% a year.

No. 6 San Jose: The metro area’s 43-point gap between biggest gain of 30% (1989) and largest loss of 12% (2009). Down years 25% of the time. A 9-point price-swing variation. Average gain of 6.9% a year.

No. 7 San Francisco: The metro area’s 32-point gap between biggest gain of 23% (2000) and largest loss of 9% (2008). Down years 27% of the time. A 8.8% price-swing variation. Average gain of 6.9% a year.


Let’s remember, California’s overall housing market has historically gone through wilder peaks and valleys than the rest of the U.S. This means most national home-price forecasts have little value to a California property watcher.

Look at the differences in these volatility measures for the California and U.S. FHFA indexes – with a stock average (Wilshire 500 index) tossed in for comparative purposes.

Best year: Up 24% (2005) for California homes, up 14% (1978) for U.S. homes and up 37% (1983) for stocks.

Worst year: Off 20% (2008) for California homes, off 6% (2009). for U.S. homes and off 22% (2009) for stocks.

Extremes gap: 43 percentage points between best and worst years for California homes, 20 for U.S. homes, and 59 for stocks.

Down years since 1978: 27% for California homes, 11% for U.S. homes, and 18% for stocks.

Price-swing variance: 9.1 percentage points for California homes, 4.3 for U.S. homes, and 13 for stocks.

Average gain since 1978: 6.2% for California homes, 4.7% for U.S. homes, and 10.1% for stocks.

Bottom line

Falling home prices in California are not just the result of events surrounding the 2008 global financial meltdown and housing collapse.

Between 1978 and 2006 – just before the real estate bubble crashed into the Great Recession – these seven big California housing markets combined had down years 22% of the time. That’s roughly once every five years.

In the decade of recovery from the mid-2000s housing bust, the seven markets have had a total of five down years. So, even before you ponder overvalued homes, high mortgage rates and growing economic uncertainty, California housing seems overdue for a price correction.

And recent gains seem unsustainable, especially since mortgage rates soared in much of 2022.

Peek at the one-year home-price gains for the seven markets through September, the latest FHFA indexes available, and how that gain would rank among all other full-year results back to 1978.

Inland Empire’s 18% increase would be its seventh-best since 1978. Orange County’s 17% would be No. 5; San Diego 17% (No. 6); San Jose 15% (No. 8); Los Angeles County 15% (No. 9); San Francisco 12% (No. 17); Sacramento 10% (No. 16).

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at

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