Housing Recovery by Income in Two Metros: San Francisco and St. Louis

by Alex Hermann
Research Assistant

The increases in home prices that have occurred since the Great Recession not only vary across the nation’s metropolitan areas, they also vary within many metros as well. The San Francisco metropolitan area, where home values are now 16 percent above their pre-recession peak, and the St. Louis metropolitan area, where home values are still 10 percent below their pre-recession peak, illustrate these variations.

In both areas, median home prices in low-income ZIP Codes are less likely to exceed mid-2000 peaks than median prices in high- and moderate-income ZIPs. However, the regions vary when looking at the changes in house prices between 2000 and 2016. Over that time period, the percentage increase in median prices in the Bay Area’s low-income ZIPs was greater than the increases in high- and moderate-income ones. In contrast, the percentage increase in St. Louis’ low-income ZIP Codes was much smaller than the increase in that region’s high- and moderate-income ZIP Codes. (In this analysis, low-, moderate-, and high-income ZIP Codes have a median household income under 80 percent, between 80 and 120 percent, and above 120 percent of their state’s median income, respectively.)

Changes in home price also vary within both metros. For example, metropolitan San Francisco has had the eighth strongest post-recession recovery in home prices. As a result, median home values in San Francisco’s high-income ZIP Codes are about $1.18 million dollars while the median value in low-income ones are $586,000, more than three times the median price for the U.S. as a whole, which is $186,500.

However, home values in many of the region’s ZIP Codes are still below their pre-recession peak (Figure 1). In all, 31 of San Francisco’s 142 ZIPs, or 22 percent, have yet to regain their mid-2000 peaks, including:

• 50 percent (5 of 10) of low-income ZIPs
• 35 percent (12 of 34) of moderate-income ZIPs, and
• 14 percent (14 of 98) of high-income ZIPs.

Source: JCHS tabulations of Zillow Home Value Index data and ACS 2014 5-year data

Most ZIP Codes that have not regained their peak median home values are located on the outskirts of Metro San Francisco, particularly in northern Contra Costa County. That area is home to 10 of the 14 high-income ZIP Codes where median prices have not exceeded their pre-recession peak as well as 8 of the 12 moderate-income ones and three of the five low-income ones. Most of the remaining ZIP Codes where prices are still below pre-recession peaks are in the urban areas south of Oakland along the East Bay, which includes many low and moderate-income ZIP Codes as well as two high-income ones.

Although prices in San Francisco’s low-income ZIP Codes are less likely to regain their pre-recession peaks, the trend is different when examining price changes since 2000. Overall, home values increased in all the region’s ZIP Codes. But on a percentage basis, the values in low-income ZIP Codes increased more rapidly than those in high-income areas (Figure 2).

JCHS tabulations of Zillow Home Value Index data and ACS 2014 5-year data

The story is somewhat different in metropolitan areas that have not seen San Francisco’s rapid price appreciation, such as St. Louis, where home values in June 2016 were still 10 percent below their pre-recession peak. There, median prices exceeded their peaks in only 27 of 147 ZIP Codes, most of them located in the region’s urban core and suburban Madison County. (Figure 3). These unrecovered areas include:

• 1 of 35 (3 percent) low-income ZIPs
• 6 of 55 (11 percent) moderate-income ZIPs, and
• 20 of 57 (35 percent) high-income ZIPs.

JCHS tabulations of Zillow Home Value Index data and ACS 2014 5-year data

Moreover, unlike San Francisco, prices in low-income ZIP Codes in St. Louis have grown only modestly since 2000 and have increased much less than those in high- and moderate-income ZIP Codes. In the run-up to peak, prices in low-income ZIP Codes grew only marginally faster than prices in high-income ZIPs. Additionally, the post-recession upturn in home values in low-income ZIPs lagged the increase in high-income ZIP Codes by nearly two years (Figure 4).

JCHS tabulations of Zillow Home Value Index data and ACS 2014 5-year data

What to take away from this analysis? Overall, home values in high-income ZIP Codes have outpaced home-value gains in low-income ZIPs since the price peak of the mid-2000s. When taking a broader view, low-income ZIP Codes have performed as well as high-income ZIPs since 2000 in fast-appreciating markets like San Francisco, while in many lagging markets, like St. Louis, home value gains in high-income ZIPs have typically surpassed those in low-income ZIPs. Furthermore, though income levels are important they are not determinative. The geographic patterns also underscore the fact that trends in home values are also a function of features such as density and proximity to the central city.

These relationships, and others, will be discussed in a forthcoming Joint Center working paper on home value trends since 2000.