Are Bay Area housing prices about to drop? Here's what experts say as interest rates hike
SAN FRANCISCO (KGO) -- When it comes to the Bay Area housing market, the list price is rarely the selling. But that may change.
Shawneequa Badger is with Badger Real Estate Group. Based out of Oakland, they have a big footprint in the East Bay.
Badger, who has been recognized as a top real estate entrepreneur by Yahoo Finance, says houses are still selling fast, even with higher interest rates.
"We couldn't be in the 3s and 4s forever," says Badger, about interest rates. "And that has been historically low. We are still historically low."
Badger thinks prices will start to stabilize, and perhaps drop a bit.
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Many experts agree that the market strategy to 'list low, get high' to attract multiple bids will change as competition slows. That will allow for more transparency in prices.
But Badger doesn't see the changes in the economy as reducing demand for housing.
"Not in the Bay Area. I think we have plenty of demand, we have a lot of pent-up demand. We are still below our levels, in terms of supply for housing," says Badger.
Doctor Tammie Mosley is a professor of Finance and Real Estate at California State East Bay. She adds that part of the demand owes to work from home policies. Families can sell their homes in Silicon Valley or San Francisco and buy cheaper - even bigger - homes in the places like Antioch or Pittsburg.
"You are able to have a lower payment amount, even with interest rates going up," explains Dr. Mosley.
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Furthermore, Mosley says any drop in home prices may not be related to weaker demand. But rather prices adjusting to offset increasing interest rates, which is in part, to reduce spending.
"It is actually curbing spending, but it is spending at a lower price," says Mosley.
Head down to the Peninsula or the South Bay, and Rabia Alizai with real estate company, Compass, sees the market a bit different.
"Our markets here are very dependent on the stock market. That is where a lot of people get their down payment money from," explains Alizai.
Alizai, who has a five-star agent rating on Zillow, has listing cities like Sunnyvale, Cupertino and Mountain View.
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She says the current bear market is putting the brakes on the buying frenzy. And rising interest rates and the seasonal summer lull is putting a drag on the housing market.
"Anytime there is a change in the market, you will see some hesitation, because people don't know what's happening," says Alizai. "But I think once people feel that this is new normal, they will emerge back into the market."
As for low to moderate-income buyers, who may fear that they have been priced out of the Bay Area market, Badger recommends to work with lenders.
"If you can save - absolutely save. But then make sure you are dialed into what the lending industry is doing in terms of great programs for entry leave buyers, you can get down payment assistance, grants. They are still out there, and they are going to be a lot more plentiful going forward than they are today," says Badger.
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