When mortgage rates fell to their lowest level in two years, Bay Area home sales surged in October after a slow September.
According to Freddie Mac, the average 30-year-fixed mortgage rate decreased gradually through the end of the summer, reaching 6.08% at the end of September. According to latest data from the California Association of Realtors, October sales increased 16.2% from October 2023 and 20% from a month earlier as a result of some purchasers jumping back into the market due to the reduced rates.
According to Berkeley real estate agent Geri Stern, people had been anticipating this and assumed that rates might not drop again. They intended to take advantage of those rates as soon as possible.
The rate reprieve was just temporary, as rates have subsequently returned to 6.84% at the end of September.
Additionally, the nine-county Bay Area’s median single-family home sales price increased 3.6% from October of last year to $1.3 million. In San Mateo County, the median price was $2 million; in Santa Clara County, it was $1.99 million; in San Francisco, it was $1.75 million; in Alameda County, it was $1.27 million; and in Contra Costa County, it was $869,500.
Even if single-family home prices have increased, buyers can still find bargains, particularly for properties that have been on the market for more than a month.
Barbara McDonald, a tenant in Emeryville, began researching a purchase this fall after learning that her landlord planned to sell her building. The 58-year-old sign-marker and graphic designer discovered a two-bedroom apartment in West Oakland that was marketed for $589,000 and fulfilled all of her desires; it was contemporary, roomy enough to accommodate guests, and had adequate parking.
The following Monday, the seller reduced the price by $70,000, so even though she missed the open house, it might have been for the best. She outbid one other bidder with an offer of $525,000. Later this week, she anticipates closing the purchase.
“I was definitely sweating it,” McDonald remarked. With a 20% down payment and a 7.5% interest rate, she was also pleased to see that her monthly mortgage payment is roughly equal to her rent, or $4,000.
McDonald stated, “I didn’t get a great interest rate, but that is a short-term problem.” If interest rates decline, she intends to refinance so that her mortgage payment will be lower than her rent.
Mortgage rates have risen in spite of a series of interest rate reductions by the Federal Reserve this fall, including a half-point decline in September and a quarter-point cut in November. This is due to the fact that rates typically fluctuate in expectation of upcoming actions by the Federal Reserve rather than in response to them.
According to Mara McCain, a broker with The Agency in Woodside, the rates are still exorbitant compared to what we’re used to. With the 3% and 4% rates, we were spoilt.
The Bay Area’s luxury buyers, who may have seen their purchasing power increase after stocks and Bitcoin both rallied after Donald Trump won the presidential election, will not be affected by the higher rates, according to agents, who anticipate that they may result in slower sales activity toward the end of this year.
According to McCain, many people use stock as their down payment, which has a significant impact on our market.
Agents claim that the situation at the bottom end of the market is different.
According to Stern, many of the houses that are on the market have had to lower their prices. Unless they are priced extremely favorably, homes aren’t moving.
The Bay Area’s median time on the market for single-family houses was 18 days in October, up from 16 days the previous year.
Oakland real estate broker Grant Inaba, who sells East Bay homes for under $1 million, has had to help sellers rethink their expectations.
According to Inaba, I had a seller who thought he could sell his house in two weeks. We had to inform him that houses are taking longer to sell, so he should expect four weeks. This is not a simple slam dunk.
When borrowing rates fall closer to 5%, Mavis Delacroix, a Piedmont-based Compass agent, anticipates seeing more business.
According to her, the interest rates aren’t impressing consumers at the moment. People don’t want to move when they have to buy at 6% after refinancing their home at 3.5%. One of her clients wants to move out of her current property, but she would have to pay the same amount each month for a smaller home because of the high loan rates.
Why you would pay the same for less square footage is absolutely incomprehensible. She enquired.
According to Realtor.com, inventory in the Bay Area grew from the previous year at a rate of 1,570 active listings, up from 1,183 in the San Jose-Sunnyvale metro area and 6,140 from 5,053 in the San Francisco-Oakland metro. This is encouraging for 2025.
Since most sellers listing now are doing so because they need to move, not because they want to, brokers believe that the end of the year can be a good time to buy, even though there may be fewer options at the moment. Additionally, consumers can benefit from less competition during the holidays.
According to Stern, all of the purchasers come out in January to purchase a home as a New Year’s goal, and then they raise prices once more. It is merely a calendar function.
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