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Home prices in the United States are finally starting to cool off. After spending the last year surging to record-highs, indications are that the California real estate market has peaked. In fact, home sales in the Bay Area are down 17.2% since last year.
First-time homebuyers and other prospective shoppers are anxious to find out what happens next. For the last few years, unaffordable home prices have left this group on the sideline.
Will San Jose home prices drop in the near future? Read on for an analysis of the San Jose housing market. Explore reasons why the current housing market appears to be on the decline.
It is important to differentiate nationwide and local trends. While the national news reports home prices are declining, this trend has not hit the San Jose area yet.
Mortgage rates are increasing and this could lead to lower prices. For now, demand is still strong in San Jose. It is still a good time to sell your home while the market is hot. If you are looking for professional advice on will San Jose home prices drop soon, contact us today to speak with an expert.
Rising mortgage rates are one reason why experts believe home prices are set to drop. To combat surging inflation, the United States Federal Reserve is taking immediate action.
In June, the Fed raised interest rates by 0.75 percentage points. This was the largest interest rate hike since 1994.
The Fed’s policy decision has a direct correlation to mortgage rates. Mortgage rates for a 30-year loan are rapidly approaching 6%. The last time rates were this high was prior to the housing crisis in 2008.
Mortgage rates will undoubtedly continue to go up. The Fed has multiple interest rate hikes planned for the remainder of the calendar year. So long as inflation is an economical threat, mortgage rates will rise.
Higher mortgage rates mean that homebuyers are spending more per month on financing charges. As borrowing expenses climb, consumers may be priced out of their dream home.
Demand for housing shrinks and prices come down as a result. If mortgage rates are your primary concern, you may want to act quickly and buy now before rates go any higher.
As demand for housing cools, inventory is expected to rise. Homes stay on the market for longer and the number of available listings grows.
This is good news for first-time homebuyers and other prospective shoppers. There are more options to choose from. Active listings receive fewer offers and sellers are more flexible in negotiations.
Weaker demand signals the end of bidding wars and sellers receiving multiple bids more than the asking price.
On the contrary, it may be possible to bid less than the asking price. While borrowing expenses are on the rise, these additional expenses can be offset by lower home prices.
Despite rising rates and inventory, nationwide trends are not present in San Jose. The Fred’s house price index for San Jose, Sunnyvale, and Santa Clara is still on the rise.
Demand is still strong due to tech workers fleeing San Francisco, Seattle, and Portland for more affordability. Remote work options have given many workers the ability to live further away from their employment centers. There are many other reasons why Santa Clara County remains in demand as well.
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