“I think that’s the hope that everyone else has as well. “We’re hopeful that the interest rates will come down,” said Bajpai, a marketing consultant. We can take our time to find the right fit.” “We’re fine with taking it slow since we don’t have the kind of pressure to quickly close a deal like when we were buying our first home. “We’re seeing a lot of bidding wars, but we don’t want to engage in those,” Tyagi, a tech attorney, said. The couple recently bought a house in the city and are currently looking for a place nearby for their parents to stay when visiting from India. Those potential sellers are now reluctant to give up their cheaper rates.Īparajita Tyagi and Ankit Bajpai, both 33, are struggling to find a second home in Berkeley now that fewer properties are on the market. That’s because many homeowners who might otherwise be willing to sell had already locked in home loans before rates started to spike in early 2022 as the Fed began raising the cost of borrowing. But mortgage rates are also playing a role in the lack of supply. The region’s chronic housing shortage is largely to blame. “Even as demand has fallen, it’s still outstripping supply, and that’s still the relevant dynamic,” he said. Still, Levine doesn’t expect the higher rates to take a big chunk out of Bay Area home prices. They hadn’t hit recent levels since 2007, before the Great Recession. For most of the 1980s, rates had been above 10% before dropping to single digits in the following decades. The Federal Reserve is expected to raise the economy’s benchmark interest rate at least twice more this year in its fight against inflation, likely sending mortgage rates upwards of 7.5% in the months ahead, said Jordan Levine, chief economist with the realtors association. In the Bay Area, a nonconforming loan, also known as a “jumbo” loan, is a mortgage that exceeds $1,089,300 for a single-family home. The average 30-year fixed nonconforming home loan, meanwhile, rose to 7.2% on Thursday, according to. It was the fifth straight month of price gains, but a 2.7% drop from June 2022. The Bay Area’s $1.3 million existing median home price in June represented a 1.8% bump from May, according to the California Association of Realtors. “There’s a seasonal trend that we just didn’t see the last couple of years,” Rubenstein said. It signals something of a return to normalcy following a pandemic real estate boom that sent prices soaring to all-time highs and rate hikes that then brought them back to Earth. Home seekers who had been holding out for rates to drop are accepting the increased borrowing costs just in time for the summer homebuying season. But growing demand from those who can still afford to buy - combined with a lack of properties coming up for sale during the traditionally busier summer months - is stoking competition, pushing the Bay Area’s typical single-family home price above $1.3 million.ĭespite the higher rates, which began to surge last year from historic sub-3% lows, buyers are now “biting the bullet” and moving forward with home purchases, said Matt Rubenstein, a real estate agent in Contra Costa County. Thinking of jumping into the Bay Area home market? Beware: Mortgage rates have been on the rise again in recent months - and are threatening to top 7% before the end of the year.Īs a result, steeper home loan payments continue squeezing out many house hunters.
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