If you are a buyer, you have to wonder, “Can interest rates get any worse?” The answer is, of course they can! 7%+ is not bad by historical standards, it’s actually quite average. Many homeowners are spoiled with 3% loans which are keeping them in their houses. Why would you swap out a 3% mortgage for a 7% mortgage unless it was necessary? The recent historic low interest rates are a big factor in keeping inventories low. Low inventories in turn are keeping prices elevated. This is especially true in Marin County where so many buyers have huge downpayments or can afford to put down all cash. Interest rates to the truly wealthy are irrelevant.
If you are not so wealthy and you need a mortgage, keep in mind who your competitors might be when getting into multiple offer situations. Not all homes are getting multiple offers however and attracting all cash buyers. Condos and townhouses generally attract first time home buyers who are scraping together their down payments and stretching their budgets go reach for the American dream. Of course, when the financial crisis hit hard between 2007-2010 the American dream became an American nightmare for homeowners in distress. For those who could afford to buy, it became a tremendous opportunity.
But I digress. My point is that much like the economy in general, the housing market has become K shaped. For the wealthy folks who are living in the most desirable areas of Marin County the real estate market continues to go up. Meanwhile, there are listings in other areas, areas that don’t generally attract the wealthiest home buyers, we are seeing listing sit and price reductions are becoming more common.
As buyers and sellers how can you make sense of it all? The best thing you can do is to talk to an experienced and trusted Realtor to get their take on your local market. Many of us are conservative in our valuations and market assessments. That’s my usual take. I’d rather under promise and over deliver. Other Realtors will paint a rosier picture of the market, which can be a dicey proposition if you aren’t working in those high demand areas.
The best approach is the simplest one. On what part of the K are you operating? Are you looking at overbidding? Do you want to use a strategy of pricing higher to try to find that one buyer who is willing to pay your price, or are you going to price more realistically near or perhaps even slightly under the perceived market value? Knowledge and experience are important in this market. Use these human assets to your advantage, and don’t just rely on AI/SI. Society as a whole has already become far too dependent on artificial intelligence. Data is good, but interpreting data accurately is far more important.