Last week, 30-year fixed-rate mortgage rates hit their lowest level in four months after hitting 7% in October. Fluctuations in mortgage rates, partly due to the Federal Reserve’s interest rate policy, have cooled the US housing market in some cities more than others.
To see first-hand how this is playing out in a market disrupted by the spending frenzy caused by the pandemics of 2020 and 2021, Marketplace reached out again to realtors in San Francisco, the Lake Tahoe area, and Missoula, Montana.
I took San Francisco Kindred SF Homes owner and chief agent Cynthia Cummins said: “Now everything has changed.” According to Cummins, the median selling price of single-family homes in San Francisco is about the same as it was in early 2022. However, a lot has changed between then and now. “Things went crazy in April and May and then we had this big dip,” she said.
Homebuyers aren’t competing as hard as they were months ago, Cummins said, as rising interest rates and layoffs hit the Bay Area’s tech sector.
Since peaking in June 2022, U.S. home prices have fallen 2.4%. That puts us just below April 2022 levels— Lance Lambert (@NewsLambert) December 27, 2022
IF U.S. home prices fall 10% peak-to-trough, it'd take prices back to Oct. 2021 levels
IF U.S. home prices fall 20% peak-to-trough, it'd take prices back to Feb. 2021 levels pic.twitter.com/uAp9LgHLYV
“Recently there have been several sales with multiple offers such as B. Offers for 12 properties,” she said. “However, the gap between the lowest and highest prices on these offers has narrowed significantly.”
Tahoe city, california
Similarly, the number of buyers interested in his Tahoe-area properties has dropped significantly, according to broker David Westall of Sierra Sotheby’s International Realty in Tahoe City, California. “There is a lot of fear, uncertainty and doubt that has always held buyers back,” he said.
Still, Westall said homes are still trading near peak market prices. “There are a lot of sellers in our market who are sitting on piles of stock … and they are not willing to sell,” he said.
Rising interest rates have discouraged many potential sellers who have benefited from the low interest rate environment over the past decade from putting their properties on the market.
Westall, meanwhile, said the influx of migrants to the area has slowed as some businesses have called on workers to return to their offices. “It created a slow-moving market,” he said.
In 2020 and 2021, many remote workers from densely populated cities purchased land in mountainous areas such as Lake Tahoe and Missoula, Montana. Mindy Palmer, a real estate agent at Berkshire Hathaway Montana Properties, said the recent influx of migrants was “like the tap being turned right.” “And now there’s the drop. Things still happen, but it’s a real eye-catcher for people.
There are fewer buyers and a power shift from sellers to buyers, Palmer said. “Sellers who had abandoned sales until just a few months ago are shocked that they don’t have quite the same power as their predecessors,” she said.
As a result, many people are waiting to see what happens in the spring market before pulling the trigger to buy or sell real estate, Palmer said.
“As agents, we are constantly asked, ‘What do you think the market will be, Mindy? And I say to them with a wink. I don’t know what will happen this year. “