After months of weak buyer interest, agents began seeing bigger crowds at open houses in January and getting more offers above asking price on their listings. In early March, however, rising mortgage rates, falling stock prices and growing Big Tech layoffs dampened hopes for a spring rebound. Then came last week’s race on the bank that was intricately linked to the region’s massive explosion in wealth.
“Not a single buyer has expressed interest in exiting,” Nina Hatvany of Compass said Saturday, before it became clear that Silicon Valley’s depositors would be able to access all of their assets. “Sellers are like, ‘I’d better sell before it gets worse and buyers don’t engage.'”
People across the Bay Area were fearful of what would come next, comparing it to the Great Recession 15 years ago, this time with SVB’s problems spread to other banks and potentially tanking startups. “It’s scary,” Hatvany said. “People are worried about whether or not we’re going to have another 2008.”
The outlook has improved somewhat in the past few days – and a side effect of the banking industry’s turmoil has been a welcome cooling in interest on mortgage loans. But buyers, sellers and agents are jittery and more pessimistic than they were a week ago.
“When people panic, it’s bad for consumer spending, especially the housing market,” said Selma Hepp, chief economist for real estate research firm CoreLogic.
The uncertainty SVB’s collapse adds will be especially acute in the Bay Area, where home prices have skyrocketed out of reach, only to begin slipping last year as borrowing costs nearly doubled and telecommuters left for parts of the country with cheaper housing. The median sales price in the nine-county Bay Area was $1 million in January, down 35% from the peak of $1.54 million in April 2022, according to the California Association of Realtors.