Bay Area homebuyers, faced with more than double last year’s real estate prices and soaring mortgages, seem to have reached their limits, something almost unthinkable in the region’s heated market, or price cuts. Is pushing up home sellers. ..
Nicole Bachaud, a market analyst at Zillow, said: “Demand is definitely declining.”
The average US mortgage rate reached 5.78% last week. Typical homes in the San Jose region in May were valued at $ 1.7 million, with an average monthly mortgage payment of $ 9,136 per month. This is nearly 60% higher than last May and more than 5% higher than this April. According to Zillow, the year. Typical home prices rose by more than 22% last year.
In the San Francisco region, a typical home price of $ 1.5 million in May means paying a monthly mortgage of $ 8,117, more than 50% higher than last May and more than 5% higher than April. House prices in the region rose 18.5% last year.
Nationwide, rising interest rates, which drive rising mortgage costs, combined with record home prices, have created an affordable mortgage crisis that hasn’t been seen since 2007, Zillow reported. Nationally, affordable housing has reached its lowest point in the last 15 years.
“This trend seems to indicate that the market has crossed the inflection of home prices between April and May, moving from higher to slightly lower prices than ever before,” Bachaud said. Wrote in Zillow’s May Market Report. “This slowdown is a clear indication that buyers are dialing back housing demand in the face of affordable challenges.”
Basho pointed out that income has not increased in tandem with home prices and mortgage rates. “It’s a lot harder than ever for new homeowners and those trying to enter the market.”
Data show that Bay Area home retailers are responding to sluggish demand. According to Zillow, the share of homes offered for sale at reduced prices in April was less than 5% in the San Jose region and less than 6% in the San Francisco region. By May, sellers had reduced the price of listed homes by more than 8% in both regions.
Lowering prices by owners, Basho said, does not put an end to the housing crisis in the Bay Area and across the country. She said the price only “slows the rate of rise.” “It doesn’t necessarily mean things will be cheaper.”
Zillow also expects rents in the Bay Area and the United States to rise due to increased rental demand. “People can be priced by buying a house, so they have to live somewhere,” Basho said.
In the San Francisco area, typical rents in May reached $ 3,214, more than 10% higher than in the previous May. In addition, typical rent in the San Jose region was $ 3,295, up more than 12% year-on-year.
Cupertino real estate agent Ramesh Rao sees the Bay Area housing market as more rational after fierce competition and spectacular prices for housing over the past two years.At the mortgage rate More than double Since January 2021, rising inflation raises the risk of a recession, and the Russian war in Ukraine creates economic uncertainty and affects many buyers, home sellers, and their agents in the stock market. The downturn no longer chooses ridiculously high prices and can no longer see homes soar quickly. Coldwell Banker Lao said.
“Typical real estate considerations are starting to get involved,” Lao said. “Is the real estate price correct? Does it look good? Is it in a good school district?”
In the Bay Area, the stock market, rather than mortgage rates, tends to guide the behavior of people buying single-family homes, Lao said. He has some clients who were trying to spend $ 4 million or $ 5 million, but now he’s thinking twice because he needs to liquidate most of his investment to come up with a down payment.
Selling a home can take two weeks instead of a week, and fewer buyers can compete for a home, but the idea that buyers are regaining their dominance is false and “significant. Expectations for “price adjustments” are unfounded, Rao said. The region is still a market for sellers, he said. Still, Lao added, “Sellers are more rational these days.”