The real estate market continues to be volatile. In an effort to battle inflation, rising interest rates are having a direct impact on both real estate and stock markets. Silicon Valley Buyers are battered by higher monthly payments (due to rising interest rates), lower down payments (due to reduced stock portfolios) which result in lower pre-approval purchase prices.We are finding that Buyers are simply unable to afford the prices being offered by Sellers forcing them to negotiate. With these factors at play, Sellers that are selling are struggling to find the right equilibrium price that Buyers are able to transact, as the market that continues to trend downward.
We are pleased to have the opportunity to help our Buyers secure excellent homes at great prices. Buyers should also realize that this interest rate environment is short term. Once inflation is under control, the Federal Reserve should lower rates and that would be a great time to refinance.
Sellers who have to sell now, will have to contend with the fact that the offer prices the market is offering will be lower than the peak Spring prices and will continue to trend downward in the short term. If there is no urgency to sell, many have opted to not sell or rent out their homes as we get through this inflationary period. Some Sellers are opting to take the gains that they can, in order to get a good price on the buy side as well.
Inventory is still at all time lows, however our inflationary circumstance is forcing monetary policy to suppress the key factors that typically fuel real estate, causing downward pressure on home prices in the short term. The hope is that we get inflation under control soon so that monetary policy can be relaxed so that the real estate market can stabilize.