In a typical year, the real estate market sees a summer market slowdown when the majority of buyers go on vacation and aren’t focused on home shopping. This year, across the Bay Area, 2022’s rising interest rates this summer season has impacted real estate sales – and this market dynamic shows up in the condo market first before reaching single family homes. Sales of higher- price homes (mostly houses) have held up much better, but cooling demand is beginning to show up slightly.
Regardless of slowdown trends, pricing remains historically high for both homes and condos. As of May 31, the median price for a single family home is $1,950,000 while the condo’s median price is $1,250,000. Below, the graphs illustrate the price climb for each market segment, dating back to 1993.
Since May 2021, year-over-year median house sales price appreciation rates have remained relatively steady, typically running between 11% and 15%.
Median prices are generalities, most useful to discern broad market trends. They can be affected by other factors besides changes in fair market value. The city contains condo projects and neighborhoods of widely varying values.
Our local real estate market is often considered to be unfettered by the federal reserve’s influence, however rising interest rates certainly slowed down the housing market, as intended.
“Housing prices should stop going up at such remarkably rapid rates,” Federal chair Jerome Powell said. “Since the beginning of the pandemic, we’ve had a very, very hot…housing market all across the country. As demand for housing moderates…you should see prices stop going up.”
Home prices were growing nearly 20% year over year coming into spring but, the recent rise in mortgage rates has slowed that pace of appreciation. Long-term rates might have peaked – we should expect more normal growth rates going forward and we may also see a continued increase in housing supply. All of this would be healthy and welcome to the housing market. With fall’s market just around the corner and rates having crested, it maybe be a wonderful time to explore owning real estate.