Home prices in the Bay Area rose another double-digit this spring, the largest increase in Santa Clara County.
But experts are waiting for high mortgage rates to pour a little cold water into the heat — some realtors say it’s already happening.
The average selling price of existing single-family homes has risen 13% to $ 1.3 million across the Bay Area of the nine counties, according to the latest data from CoreLogic and DQNews. The median of Santa Clara County reached $ 1.8 million in April, up 23% from a year ago. Alameda County was not too late with a 20% increase.
“Demand remains strong, as evidenced by rising home prices,” said Selmahep, Deputy Chief Economist at Core Logic. “It’s actually really strong in the sense that it’s still a lot of over-bids, most homes sell rising asking and home prices and are still trending at double-digit rates.”
Alameda County is still expensive, especially in desirable cities such as Oakland and Berkeley, said East Bay realtors Karin Selby and Keller Williams Realty. And as people migrate from the more expensive areas of San Francisco and the peninsula to pursue a remote work lifestyle, the market continues to see demand.
Traditionally the most affordable Contra Costa County in the core Bay Area county was the slowest-growing year-on-year, but the median in April approached $ 1 million. Median prices in Marin County and San Mateo County reached $ 2 million, and San Francisco wasn’t too late.
But rising interest rates have weakened buying enthusiasm, Selby said. According to Freddie Mac, interest rates on 30-year fixed mortgages jumped from 3.76% in early March to 5.1% at the end of May. Interest rates have softened slightly in recent weeks, but are well above the level of a year ago when the 30-year average interest rate was below 3%.
According to Selby, most of the purchase budget was lost as interest rates rose, and some are now suspending and revaluing searches. She said this increase had a particular impact on buyers looking for her first home (probably a price between $ 700,000 and $ 1 million).
This means that today’s market is still “very competitive” but not as crazy as March and April.
“Maybe two months ago, the house received 15 offers, which would be 30-40% higher than the list price,” she said. “Now it’s a bit flat line. So you might be getting 8 offers instead of 15 and it’s 20-30% higher than the list price.”
Prices are likely to continue to rise in the coming months, but will probably rise more slowly, according to Selby. Despite market changes, she does not recommend delaying home purchases.
“Sure, prices will never plummet, as they did in 2008 and 2009,” she said. “And interest rates will probably rise again this year.”
Mike Gaines, an agent at Compass Real Estate, said Santa Clara County is already undergoing change. A few months ago, sellers could list virtually anything and receive multiple offers. Well, that’s not always the case, he said. Some sellers are pulling their homes away from the market because they aren’t getting as much interest as they wanted. The agent is reporting a late open house.
Gloria Othon feels the cooling market directly. 61-year-old Othon spent $ 115,000 on a one-year project to remodel her bathroom and kitchen in San Jose, redo the landscaping, buy new water heaters and other appliances, and replace the roof. rice field. She wanted the refurbishment to raise her selling price.
Otton and her husband bought a house in the Berryessa district of San Jose in 1998 for $ 350,000, but their children are now growing and no longer need much space.
Othon listed the house for $ 1.788,000 last week and was hoping for a flood of offers. But so far, it was a cricket. She is worried that it will take too long to take advantage of the hot housing market. And if a home doesn’t sell, she and her husband can’t afford to miniaturize by buying a smaller home or condo.
“I’m really scared,” she said. “I feel I might have missed it, and what do I do now?”
In addition to high interest rates, inventories are also rising, which could also lead to lower prices, Gaines said. According to Gaines, 80 homes are currently on sale in the Willow Glen district of San Jose, up 60% from two months ago. Across Silicon Valley, 1,000 to 1,700 homes two months ago are listed.
“I think we’ll see some leveling off, and we’ll see some decline,” he said.
Broader economic turmoil during inflation, gas prices, stock market volatility, the crisis in Ukraine, etc. may also encourage more buyers to suspend their search for their homes, Selby said. Said. But that doesn’t change the fact that the Bay Area is expensive and likely to stay that way.
“All of this is relevant,” Selby said. “But it’s still a crazy and crazy market.”