Updated 09/18/2026 This newsletter is updated as the economy and situations change.
With the exception of San Francisco were prices are going up, most of the Bay Area prices are holding steady or declining relevant to the value of the dollar. If there’s 3% inflation and your home stays the same price, essentially it lost 3% in value.
Several things are hurting the housing market right now.
An increasing population puts a strain on existing housing causing more demand than supply and keeps prices going up. Today the reverse is true, the population is declining, reducing demand for existing housing. The massive annual population increase, the Bay Area was used to for decades, has come to a screeching halt. People moving into the Bay Area are now offset by people moving out of state to follow the relocation of their company or to retire where their dollar is worth more. H1B work visas, which were responsible for bringing many high paid employees into the Bay Area are currently frozen. Instead of bringing people into the country for these positions firms are now farming out the work overseas .
AND The current population is not having many children.
AND Mass migration has stopped.
AND Current mortgage interest rates hovering around 7% is more than double what it was in 2021, averaging under 3% back then. People who want to buy a bigger or smaller home to suit their needs will not trade their low interest rate for a high interest rate. This leaves only cash buyers which is a minority of the market.
It’s a good time to buy. Interest rates being high and the market being soft allows a buyer to negotiate a better price. When interest rates come down prices will go up. So by now and refinance then to get the best of both worlds.
Overall, homes are taking an average of 3 to 6 months to sell depending on the city. This is up from several years ago when they took 2 to 3 weeks to sell.
The economy/employment – The AI industry is Silicon Valley’s new big industry. Some people think AI will inevitably take jobs away from office workers. Time will tell. The Bay Area also has top-notch universities and hospitals which attract out-of-towners to come here, leave their money and go home. These industries are very stable and profitable for the local economy.
On the flipside, many large firms have pulled out of California taking jobs with them. They include: Tesla, Twitter, Space X, Chevron, Oracle, Charles Schwab, Hewlett-Packard, In-N-Out Burger, Palantir Technologies, AECOM, CBRE Group, Playboy Enterprises, John Paul Mitchell Systems, FICO and even our local Budweiser plant and Valero oil refinery have left or are leaving the state. This on top of a countless number of retailers that have permanently closed their doors due to sales loss from online shopping and inventory loss from shoplifting. Lastly, San Francisco’s tourist industry is significantly down, but the AI industry is moving in there quickly and buying up real estate, escalating prices.
Questions & Answers
Q Is now a good time to sell a single-family home?
A I believe yes, especially if you plan on selling in the next year or two anyway. Interest rates are said to go up again later this year which will not help the sale of the home, also wintertime is statistically a slow market.
Something to remember: if prices are high when you sell, your replacement property will be expensive. If prices are low when you sell, your replacement property will be cheap. Knowing this removes a lot of the perceived risk of timing the perfect market to buy or sell.
Q Is this a good time to buy a single-family home?
A Yes, but only if you’re buying a home you plan to keep long-term. If you bought now and saw a minor price drop over the next year or two it would likely be offset by the fact you would be paying down your mortgage instead of your landlord’s mortgage over those same few years and you would experience the joy and pride of home ownership during those years of your life. (Not to mention the tax write off) And that’s all you really have, is years of life. If you think rates will be coming down in a few years, it’s better to refinance when that happens versus waiting for it to happen. I love this saying, “You marry the house but you date the interest rate.” It’s a slang meaning you will be in the house for a very long time but rates go up and down. While rates are up you get a discount on the purchase price and when rates go down, you refinance into a lower interest loan. In the long term you win both ways.
Confused? Give me a call. If it’s real estate related, and I’m happy to explain it. 707-332-8301
Q What about property flipping?
A If you are thinking of flipping a home, it’s a risky time to do it.
Q Should I fix my home up before I sell it?
A Generally yes, because most homebuyers today are afraid of projects. Today the typical buyer is a young, well-educated, well-paid professional with little interest or ability to work on a home. They prefer it “Move-in Ready”, but improvements can cost more than they benefit a sale. Cosmetic work is still considered the best investment when selling a home. Beauty always sells.
Q Is now a good time to buy a multi-unit income property?
A Yes! High interest rates affect income property prices more than single-family home prices. Just be sure the real CAP rate as reflected in the seller’s tax schedule E is greater than the current mortgage rates you will pay for that property. OR – Have a rental property professional such as myself oversee the transaction. (Alex Schauffert – 707 332 8301) Remember, multi-unit income producing properties are valued on their profitability or CAP rate (click here to see how it’s calculated). Rents have not gone up significantly in the past year or two and may not for the next year or two. That said, make sure the property is profitable at today’s actual rents, not pro forma rents. Check if the tenant so long term and therefore likely to continue to stay or are they brand-new tenants with no track record to know if they will stay. Some believe we are headed for a slowdown (recession). If this causes homeowners to disproportionally sell their homes they will likely end up as tenants. Bad for them, good for landlords. That is what happened in the 2007 recession. Then, home prices dropped but rents went up. Just remember, a significant population drop, if one happens, will hurt rental values. Then again if industry moves back to California and the population stops declining and goes back to growing, rents will skyrocket and multi-unit properties, bought at today’s discounted prices, can be the investment of the century.
Q Is now a good time to sell a multiunit property?
A No! Prices are down because of higher interest rates. However if you are running at a loss and I recommend selling.
Disclaimer with regards to future predictions: Although this is compiled from my 30+ years’ industry experience, it is my best opinion. Its accuracy can’t be guaranteed and should not be entirely relied upon when making financial decisions. If you are not already in contract with a license California real estate broker, let me oversee what you want to do with regards to real estate investing and I’ll help protect your interest and your money.
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