Based on my experience, having gone through the 2008 crash and the subsequent boom afterwards, in addition to the Covid spike and up until now we are not in a housing boom. Certain factors are keeping this market in a semi-normalized state.
- Interest rates are still at a point where people are not willing to pay that premium and so therefore buyer interest is tentative at this time. There are people who need to buy right now and those buyers will be more selective around what they purchase and how they negotiate when writing an offer. This is not to say that there are not multiple offer situations because the Bay Area definitely still holds its value, however there are Off market sales and great starter home opportunities available
- Tech layoffs are taking place at some of the larger companies in the bay area. Although layoffs are a factor many buyers that couldn’t compete over the last few years because tech buyers had more money and higher preapproved. Loan amounts are now coming out to start their home purchase journey again. There are still cash buyers in the 2,000,000+ range for the right house. These types of transactions are more prevalent in the highly sought after areas.
- Rising inflation has definitely been a deciding factor when purchasing a home. With the interest rates being where they are and monthly expenses going up by 20 to 30% the monthly mortgage payment will definitely take a backseat to continuing to living comfortably. Until inflation decreases, or average salaries increase, people will typically put their home purchase on the back burner.
- Homeowners insurance is becoming a major issue in California due to some of the major insurance companies pulling out due to California regulations. California is currently negotiating with insurance companies to bring them back into the Frey. Currently the FAIR plan is the only option for some buyers, and this is becoming an overloaded system due to the fact that it was supposed to be a second or third option when it was first introduced.
These are the four major factors that slowing the market down. For sellers, it’s also fine line. They are well aware that they may not get the highest price possible at this particular time however, some of them will put their house on the market or do off market sales in lieu of waiting if they get the right offer. Some of my Buyer clients have been extremely surprised by my resources in finding off market or motivated sellers before the home hits the market. If you are in the market to purchase, let’s do a 15 minute phone call So I can explain the benefit of my services.
Are you looking for Buying or Selling Property in California? Contact us: +1 (650) 219-9143
