San Jose, CA - A staple of the Bay Area’s economic strength is faltering as the median home price in the region and across California has dropped.
South Bay realtor, Renee Ross, has been trying to sell a small, 865 square foot, one-bedroom, one-bath home for nearly a month. Despite its Willow Glen address, there haven’t been any takers.
"We’ve gotten a little spoiled right now. So in this market right now, things will sell, they’ll just take a little longer," said Ross.
Neighborhoods that once were flush with "For Sale" signs see few, if any, now.
"It has been a struggle, but I think it’s becoming a little more real for both sellers and buyers," said Kathee Shatter, a Compass Real Estate agent based in the North Bay.
The drying demand corresponds with a drop in home prices across the region. California home prices are down 8.7% from May’s post-pandemic peak. The current $1.26 million median price is down 0.5% this month, and 16.5% since May.
"Well, there’s no question that it’s mortgage rates that’s pushing it down," said Dr. Robert Chapman Wood, a strategic management professor at San Jose State University.
The Federal Reserve has already made it more expensive to borrow money. And Board members have signaled another hike is likely by next year.
"The median priced home now comes with a mortgage will cost you 50% more than it did this time last year," said Daryl Fairweather, chief economist for real estate brokerage firm Redfin.
The erratic nature of stock trading is giving potential buyers a bad case of nerves, as many buyers have money for a home purchase tied up in the market. Experts said this further chills purchase prices.
"The big question is whether the economy itself has cooled enough to be a negative, in addition to interest rates," said Dr. Wood.
For realtors like Ross, the answer to that question could mean the difference between making a sale, or pulling a home off the market.
"The market’s changed," she said. "You just need to be patient and hang in there, and the buyer will come."
Ross and others, are hopeful those buyers will come back before fears of worsening conditions kill interest, and sales, all together.
Jesse Gary is a reporter based in the station's South Bay bureau. Follow him on Twitter @JesseKTVU and Instagram @jessegontv.