Currently, headlines and opinions are mixed regarding the Bay Area real estate market — some suggesting it’s still a “crazy” market vs others who think we’re about to crash. As a real estate agent in the East Bay trenches, I strive to stay in tune with the market, and here is my prediction: a market slowdown is looming — we just have not fully felt it yet.
What I mean by “slowdown”, is more homes will be sitting on the market longer and will likely see decreases in sales prices compared to just a few months ago. And as a result, the average sales price will flatten or even possibly decrease for the months to come.
Here are my reasons for a predicting a slowdown:
- Buyer net worth, predominantly in the Bay, has been hit hard by stock market fluctuations. People holding tech stocks may have found their net worth decline by more than 20%.
- At the same time, rising interest rates reduce a buyer’s purchasing power. Many buyers are already stretching their monthly debt-to-income ratios to buy a home in the Bay Area, which is a key metric for loan approvals. When a home costs hundreds of dollars more per month from rising interest rates, it can make a material impact, especially at lower price points where the monthly increase can weigh more heavily.
- Mortgage applications have also decreased about 8% year-to-date. Anecdotally, of the lenders I work with, many shared their mortgage applications have dropped considerably since last year. Ultimately, this means fewer buyers are entering the market, which means a shrinking buyer pool.
So what should you know if you are thinking of selling your home?
Seasonally, summer months have the highest inventory and sales prices. More inventory in the summer, however, may not bode well for sellers since it means more competition — giving buyers more options in an already waning buyer pool. As a result, the completely dialed-in homes will soar, while the ones that leave a lot of room for criticism, will sag. Being strategic about presenting your home to stand out among the competition is more important than ever. If you want help to make your home soar, reach out to my team and me!
