To say that the real estate market has been interesting over the past few years is an understatement. From record-breaking demand for homes to sky-high mortgage interest rates, little has been predictable since the start of the pandemic.
Despite this lack of predictability, people still need to buy and sell homes. Since things have been so unusual since 2020, there can be far more anxiety and fear for both parties. If you are looking to buy or sell, how can you feel confident in this market? Explore some of the emerging trends and patterns for the remainder of the year to get the full scoop.
Condo prices have gone up
According to the latest data, the prices of condos have risen through the first half of the year in the San Francisco Bay area. Individuals looking to list their Bay area condo later this year will likely earn more than they would have if they sold it last year.
Whether you own a Palo Alto condo or a condo in any other part of Silicon Valley, now is the time to consider selling. While prices may continue to rise throughout 2022 and into 2023, they will likely only shift upward slightly. You will not see the massive, nationwide property-price increases that happened in 2021. If you’re in doubt as to whether this is the right time to sell, always reach out to your trustworthy Bay Area Realtor.
Home prices have also risen
Upon browsing Sunnyvale houses for sale, you’ll also notice that home prices continue to rise. This is still a great market for sellers — no matter what type of property you own, as there’s a good chance that you can sell the property for more than you originally paid.
On the flip side, if you do choose to sell, the next home you buy will also be higher in cost. If you are looking to sell simply to earn extra cash on your primary residence, you may want to pause before making that decision. If you are looking to sell an investment property, you’ll still want to do your research to ensure that selling is a better option than renting.
…but this trend isn’t likely to last
Although predictions vary, most real estate experts anticipate that the price increases on condos and homes will slow by the end of this year (or in 2023). This prediction is already supported by the significant slowing of home value increases since 2021.
Prospective buyers and sellers should use this information to make the most informed choice based on their unique situation. Leaning on the expertise of a skilled Bay Area Realtor is the best way to get sound advice and to make the choice that benefits you in the long run.
Mortgage rates will continue to be higher than they were over the past two years
Throughout 2020, buyers enjoyed low mortgage rates thanks to the Federal Reserve lowering rates to counteract the effects of the pandemic. Toward the end of that year, average mortgage rates hovered around 2.68% for a 30-year FRM.
Since that time, and especially this year, rates have increased significantly. At the beginning of June 2022, the average interest on home loans was around 5.27%. In combination with inflation making the cost of daily living far more expensive, these rates increase the challenges for first-time buyers trying to enter the market.
When can prospective buyers expect these increases to calm down? Unfortunately, predictions are mixed. Quite a few individuals in the industry believe that mortgage interest rates are finished rising. Others believe that the current slowdown is temporary and that additional increases should be expected through the start of 2023.
Inflation will play a significant role in how the market shifts
Inflation has taken center stage in the country's economic news. The price of eggs, rent, gas, milk, and nearly every other good has increased sharply in 2022. With wages remaining stagnant for most workers, affording the basics has become more of a challenge, even for high earners. This is especially true in Silicon Valley, where prices on a multitude of items have hit nationwide records.
The struggle to budget for the basics is absolutely impacting the real estate market. Many individuals who’ve wanted to purchase their first home cannot do so because of the high costs of living.
What makes this problem even worse is the excessively high cost of rent. With higher monthly expenses, it is more challenging for hopeful buyers to save for a downpayment. If this trend continues, it will likely impact the real estate market on a more severe level.
Inventory has increased across the area
One of the biggest real estate stories in 2021 was the low inventory of homes and condos nationwide. Buyers frequently had to make offers well above asking to secure a property due to the highly competitive nature of the market.
To the relief of many, this extreme competitiveness has backed off a bit. Inventory has increased throughout the country, including in the Bay area. This trend should continue to progress, making the buying experience far less competitive and stressful than it has been over the last year.
Staying on top of trends has never been more important
At home and around the globe, the world has been extremely unpredictable over the past few years. Since major nationwide and global events can affect the real estate market, staying abreast of trends and the latest news has never been more critical.
Are you seeking a reliable local realtor who stays up-to-date on the latest insights and market trends for you? Whether you’re hoping for luxury or single-family homes for sale in Sunnyvale, CA, or other incredible communities of the Bay area, Spencer Hsu is the realtor you want on your side. Ranked in the top 1% of Bay Area Realtors, Spencer Hsu and his team are your #1 advocates. Spencer has lived in the Bay Area for over 36 years and is part of a results-oriented team you can trust to guide you along your real estate journey. Contact us today to get all of your buying and selling questions answered.