The Market

What does the most recent rate hike mean for buyers?

By September 30, 2022 No Comments

The Fed just raised rates by another 3/4 of a​ ​percentage point.

Here’s how buyers are affected​:​

Let’s say it is January 3rd, 2022​ ​and you’ve been out swinging, making offers,  in a hypercompetitive market trying to score a home.

Prices have risen so much and you’re barely squeaking in. What you could have bought 15 months ago is now a lot more expensive. You’re settling to some degree but desperate to get in after being beat out in competitive bidding so many times.

You’ve been pre-approved for a $2 million home purchase and your payment with 20% down ($400,000) is $8,261 per month at 3% fixed rate, including​ ​taxes and insurance. *

Prices skyrocketed the first few months of the year, peaking in April, making buyers more desperate to get in.

Interest rates were rising all year. By May they were up nearly 70% from Jan 1. Being on the inside, it felt like the market changed in an instant. We were overdue for a shift in the market.

Fast forward to today with the same pre-approval scenario, except your rate is 6.125%. With that same monthly mortgage payment you’d be able to buy a home for only $1,400,000.​\​

A $1.4 million property is vastly different than a $2 million. So, that buyer may be on the sidelines now.

A $2 million home would cost you $11,570/month. Over $3,300 more. Not everyone can afford to shell out $3,300 more per month

or the same product and not everyone wants to.

At the same time we are finding some buyers still jumping in before rates go up any higher.  And many buyers (35%) who will pay over asking to get a piece of the Marin County pie.

Because we are in a transitional market, it is too early to definitively say where we are going.  The trends over the last 10 years were not sustainable.  We need to find balance and that is where I think we are headed after some rockiness.

According to mortgage broker Rob Spinosa: “It is a back to basics market. Can you afford the payment. Do you see yourself in the home for 5+ years?

If the answer is yes to both, you will almost certainly win in the long run.”

Where do you think we are headed?

How have interest rates affected you?

* Thanks to​ ​Fif Ghobadian

SVP of Mortgage Lending at Origin Point for providing these numbers.


The doom and gloom in the news is not always accurate. Real estate markets are very local. There are still plenty of opportunities for both buyers and sellers.

For example, a friend of mine’s daughter just purchased a home in a very desirable area. There were going to be multiple offers, so she thought she might not have a chance. She was encouraged to move forward and was the winning bidder.  By the way, the appraisal came in above her purchase price.

“Everything is going under the asking price.”

“Prices are falling”

Not true!

35% of September sales were at or over the asking price.

The average price is up 3-4% in the past 12 months. It just feels like a big decline because there was a dramatic spike in prices in the 1st quarter of 2022.

Below are the facts for

September 2022 vs 2021.

Single family homes

Year   #sold  Avg price  $/SF   DOM*   Multiple offers/

Sold w/in 30 days

2022    132     $2.174     $963     32    60% sold 3.5% over                                                      ask/60% in <30 days

2011     202    $2.092     $960    27    67% sold 7.5% over                                                     ask/60% in <30 days

* DOM= days on market​

Clarification:  Last week I may have given you the impression that crypto in real estate is the new big thing or soon will be. The most important part of the subject of the mail was “or is it” (the new big thing).


Purchasing using crypto is not common in real estate and I don’t think it is going to be.

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