Did you catch today's big news? Mortgage rates made their largest week-over-week decline since 1981! The average 30-year fixed mortgage rate fell to 6.61% from last week's 7.08% offering a bit of relief after the steady increase we've seen over the last 6 months. It is unsure how long this rate reduction will last, or if we'll see any further decreases in the foreseeable future. But it's a pretty broad consensus that we'll likely never again see the levels of mortgage rates we enjoyed over the last few years. Our Bay Area real estate market is clearly in a period of adjustment to what will be the new norm.
It's a good time to revisit the market fundamentals that make our local real estate market tick. The Bay Area has and will continue to have for a very long time, a significant housing shortage. Supply and demand ultimately rule the market, and we are chronically under-supplied. As we saw an unnatural (shall we say crazy?) ramp-up in home prices during the pandemic, we are now seeing a correction that is bringing prices more in line with where we would likely have been organic without a pandemic-driven demand shift. The Bay Area has never been a bargain real estate market. Even during previous economic downturns, our area's rebounds have typically come relatively quickly. Trying to time the market as to when the turn will occur probably requires Jedi-mind tricks vs. some specialized real estate expertise, lest anyone tell you otherwise.
So are you still watching and waiting to buy your home? We have seen widespread price reductions across the board over the last few months. Buyer activity is also at a very low level. All this means Bay Area buyers have more leverage and less competition than we've seen in a very, very long time. Waiting for further price reductions or interest rate decreases might put you in a better financial position in a few months. We don't know. But if those interest rates don't change much (ever) again and all the buyers out there begin to return to their home shopping, we'll see home prices begin their inevitable march upwards. Paying a higher interest rate on a much lower-priced home now might be the math that we all actually like: YOU getting that Bay Area home that you love at a price that works for you. That math was a lot harder to calculate in years past!
Want to discuss your buying power in the current market? Or the latest updates in our local market? Reach out and let's chat! I can't tell you what is the right next step for you, but what I can guarantee you is that getting more educated on the latest data for our local real estate market is the right next step for every buyer!
Credit: Yahoo Finance https://finance.yahoo.com/news/mortgage-rates-drop-170024003.html