November Newsletter

Rebecca Brooks

Market Watch

Interest Rates, Interest Rates, Interest Rates! It's all about these rates.

I don't know if you read as many real estate related blogs or visit as many industry websites as I do, but it seems to me like everyone can't stop talking about the rising interest rates.  Yes, I realize the importance of the US economy on all of our lifestyles, and I understand the effects of increasing costs, unemployment rates & looming recession predictions on our psyche in general; but I am hearing a lot of doom & gloom happening within my own industry - and it's coming from many of my own colleagues and our brokerage founders & leaders.

Yes, costs are rising; yes, the market is slowing down....but people still need housing (more than ever, it seems now), life still happens, jobs change, families needs change, people downsize, get divorced, move on.  Sellers will still need to sell and Buyers will still need to buy, despite the rising interest rates. The real estate market is like a big machine - it keeps on moving, even if it slows down a gear or two.

Last week I posted a poll on my Facebook Business Page  that asked my followers to share their highest-ever interest rate. The 'winner' answered that she paid 16% interest back in the 1980's - doesn't that seem crazy high to you? The truth is, we've all been a bit spoiled by the recent super low interest rates that we've had the benefit of experiencing during the past decade or so.  Click Here to read a great article by the lender SoFi regarding the history of mortgage rates and how things have changed during the past fifty years or so.  Take a look at the chart they use - you can see that current rates are on the rise and are comparable to the year 2010's rates. 

Using San Francisco City data alone, the average sales price of a single family home has risen from about $900K in 2012 to about $1.9M earlier this year in 2022 - that's a ONE MILLION DOLLAR difference in an 'average' home in the City.  If an owner has kept their property during this time, their equity is probably greatly increased. Take a second and think about how crazy competitive our market has been, especially during the past few years. We've seen properties consistently selling for over the asking price. Buyers are never alone when it comes to making an offer - sometimes there have been upwards of 10, 20 or more offers on most every listing. We have been experiencing, living with and working in, buying in, selling in - one of the most competitive markets in the entire country; this has been what we are 'used to.'

Now, however, things are slowing down; we all have to adjust. Buyers are taking longer to make up their minds, in some markets they have more to choose from (SF condo, anyone?), they are now often afforded the opportunity to make offers with contingencies that never would've gotten accepted a few years ago. It feels to me like things are becoming a bit more balanced and less frantic. I, for one, welcome this change.  Here's something to think about - if you are a Buyer, would you rather buy now at 6% and maybe get an 'under asking' offer accepted, with Seller concessions or credits towards closing costs? or would you rather have to bid hundreds of thousands over the asking price and waive all contingencies to be a 'winner' in a multiple offer situation?  And if you are a Seller who would like to make a change, maybe downsize or upsize, here's your chance to make an offer contingent on your existing property selling, which would have never flown these past few years. 

Life goes on. Real estate still sells; you can't base your decision to buy or sell on the variability of interest rates.

It all comes down to this - what is the best timing for YOU and YOUR situation?  If you think you are ready to buy or sell, reach out to me and we can have a nice long discussion about the market and how I can help you decide.


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