San Mateo County home prices spiked in February to an average of $1.95 million from $1.48 million in January, but it merely is a return to the average of a year ago when it was $2 million.
The number of sales also ticked up 11.3% to 117 closed sales from January to February, and experts suggest a lull in interest rates that have since shot up may be the cause.
Samuel Spinella, a Realtor with Spoke Real Estate, said the 31.8% jump in home prices indicated buyers were outbidding each other as the interest rates were down.
“It’s a perfect storm of sellers realizing a lower priced market and buyers having the opportunity to answer with a great bid, fueled with a low interest rate,” Spinella said.
The interest rate for a 30-year fixed mortgage was 6.02% Sept. 15. That number rose until it peaked Oct. 27 to 7.08%, a possible reason why home sales the past few months were down. Then rates started to decline bottoming out at 6.09% for a 30-year fixed rate mortgage on Feb. 2, according to the FreddieMac website.
“A lot of people are saying the interest rates are the issue,” said Spinella, who added he tells his clients to marry the house and date the rate, meaning they can refinance when rates go down.
More recently, interest rates are rising, however. Rates were still around 6.5% when, on March 10, Silicon Valley Bank failed and the stock market took a hit. Rising interest rates coupled with stock market uncertainties takes the buying power away from prospective homebuyers, Spinella said, whose sales are focused in Silicon Valley and the greater Bay Area.
However, he said he is hopeful this spring has an opportunity to be active. The bank’s failure could mean some homeowners need to sell out of necessity to cut their losses, Spinella said, but he admits it’s still too early to tell how things will shake out.
“We still have low inventory and that could fuel the market where we are continuing to have multiple offers, it won’t necessarily be like last year because of the rates,” Spinella said.
Marla Perego, San Mateo County Association of Realtors president, believes the news of the bank failing affects potential buyers and sellers’ confidence in the financial institution more than anything.
“Certainly when you hear news like this, you want to fold in and think if it’s smart to buy and all the factors and if there are no comforting thoughts people tend to retract,” Perego said.
Confidence is everything, Perego added, and for many homeowners buying a home is the biggest purchase of their life, they just want to be sure it’s the right time.
“The idea of having home ownership is still a positive thing and people still want to buy,” Perego said. “Home ownership is still one of the best bets in town.”
