San Francisco Bay Area Market July 2022 Update

The tide is turning. It’s becoming more apparent that the seller’s market will turn into a buyer’s market for the foreseeable months in 2022. June is the 2nd consecutive month where month-over-month sale prices dropped across almost all counties in the bay area. As more media coverage about the home price dropping, more sellers will go into this panic mode and want to put their homes on the market.

Just yesterday, the Fed announced a 0.75% increase to the fed funds rate from 1.75% to 2.5%. Some of our buyers ask whether they can expect a 0.75% increase in mortgage interest in the upcoming months. The answer is probably not. Historically, 30-year fixed rate mortgage trends with the yield of 10-year treasury bonds. You can read more about the reason here.

If you examine the recent gap between the two curves, you will notice the gap has widened from the historical average 0f 1.75% to over 2%. This current gap represents the market’s panic as the recent Fed’s move on the interest. As this shock passes and more economic data is released, I believe the market will digest and return to the historical gap 1.75%.

Economists expect the effects of the upcoming fed rate hikes will be heavily discounted on 30-year mortgage rates.  National Association of Realtors Chief Economist Lawrence Yun believes the mortgage interests will remain 5.5% to 6% throughout 2022.

This is just the beginning of a series of month-over-month price drops ahead of us. If you are considering selling and want to discuss strategies to maximize your profit and pay minimum tax, you can contact Nikki.