For two years, the Bay Area has experienced an unprecedented housing market with historically low interest rates and historically low inventory. In response to this unique pandemic real estate market, we saw bidding wars and rapidly escalating prices throughout the region.
The market is slowing a bit as rising mortgage rates and inflation may give homebuyers reason to take a breath in their home search.
WILL HOME PRICES DROP?
Don’t expect home prices to suddenly plummet in response to these market changes. In fact, experts advise that although home prices may not rise at the unsustainable rates of the past two years, prices may settle into a more expected rate of increase and may normalize to pre-pandemic conditions.
Home price increases in the bay area are predicted to decline to single digits by next year. But here’s another way of looking at that statement: Prices are still expected to increase compared to the prior year—just not at the breakneck pace of the last couple of years. Real estate remains a great investment for both homeowners and investors.
WHAT DOES IT MEAN FOR BUYERS?
It’s actually promising news. Most of the frenzied bidding wars are a memory and buyers often have a little more time to make an offer while maintaining contingencies they may be in their best interest. And although interest rates have risen, they are currently near pre-pandemic levels and savvy lenders are putting together great loan packages including adjustable loans and buy downs to meet the changing needs of qualified buyers.
WHAT DOES IT MEAN FOR SELLERS?
What does it mean for sellers? A well-priced, well-presented home remains a valuable commodity in this market. Talk to Laura, your neighborhood expert, for all the details regarding the market in your neighborhood.