Even with interest rates at their highest level in 23 years, undeterred buyers are scrambling over a limited number of prices on the market, pushing up prices.
A drone view of a housing development in Dublin in February 2023. Median home prices in the nine-county Bay Area rose 6.6% year-over-year from September 2022.When Joseph Atkinson and his wife Cecilia began shopping for a home this year, they realized that anything they could afford would be smaller than the home they were renting. The culprit? High mortgage interest rates.The Atkinsons are not alone. Across the Bay Area, home buyers are seeing their budgets shrink with each rate increase.
That’s led to a prolonged cooldown in home sales, with Bay Area sales declining 23.7% from last September. Nationwide, sales of previously owned homes in 2023 areBuyers today are swallowing the high interest rates, gambling that it’s worth having a foothold in the market now, with a chance to refinance later if rates come down.
Some potential buyers last year opted to wait until interest rates came down, that is not likely to happen anytime soon. That’s the way that Shardul Pathak sees it. A 37-year-old hardware engineer, Pathak bought a three-bedroom, two-bedroom home in Campbell this May for $1.5 million — a price he considers high, but less than it might have been with more buyers bidding on the property.
On the other side of the Bay, the Atkinsons were outbid twice before they landed on a two-bedroom home in San Leandro. Joseph Atkinson doesn’t want to imagine what it would have been like to search for a home during the pandemic, when 3% interest rates created unprecedented demand.Although the Atkinsons are looking on the bright side, there is a big benefit to those who bought when rates were lower.
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