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Bay Area homes are selling below asking price for first time in 10 years

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Winter

Winter

Tribune Content Agency

Looking to buy a home in the Bay Area? The odds of scoring a deal could be tipping in your favor.

For the first time in over a decade, homes in the region are selling, on average, for less than the asking prices, according to data from real estate brokerage Redfin.

What are closing costs?

People are sometimes surprised by closing costs because they don’t know what they are. According to Bankrate: “Closing costs are the fees and expenses you must pay before becoming the legal owner of a house, condo or townhome . . . .

Closing costs vary depending on the purchase price of the home and how it’s being financed . . . .”

In other words, your closing costs are a collection of fees and payments involved with your transaction. According to Freddie Mac, while they can vary by location and situation, closing costs typically include: n Government recording costs. n Appraisal fees. n Credit report fees. n Lender origination fees. n Title services. n Tax service fees. n Survey fees. n Attorney fees. n Underwriting fees.

How much will you need to budget for closing costs?

Understanding what closing costs include is important, but knowing what you’ll need to budget to cover them is critical, too. According to the Freddie Mac article referenced above, the costs

See McDonald, Page 4

The milestone reflects a slowdown in the Bay Area’s notoriously scorching housing market as rising mortgage rates squeeze out many wouldbe buyers and hammer prices. This week, the average rate on a typical 30-year home loan hit 6.3%, double the historic lows during most of the pandemic – when buyers rushed into the market in droves to take advantage of the cheaper mortgages. The higher rate is boosting monthly home payments, sometimes by thousands of dollars.

“This time last year, you were absolutely enjoying that market, but it took a pretty sharp turn,” said Matt Rubenstein, a Contra Costa County real estate agent.

Less competition means those who can still afford to buy are gaining the upper hand in price negotiations.

Redfin’s “sales-to-list ratio,” a key metric comparing sales and asking prices, is bearing that out. A sales-to-list ratio above 100% means home prices are selling higher than asking prices. A ratio under 100% means home prices are selling lower.

Across the core Bay Area, the sales-to-list ratio has remained between 98% and 100% over the past three months. That means sales prices hovered around 1% to 2% below asking prices on average during that period. It’s the first time that’s happened since early 2012 when Redfin began tracking the data.

Just a year ago, in May 2022, as home prices peaked at record highs, the sales-to-list ratio reached 114% in the San Jose metro area, 112% in the Oakland metro and 111% in the San Francisco metro.

The shift in the market forced one of Rubenstein’s clients to slash the asking price of a suburban Lafayette home from $2 million to $1.7 million after it sat unsold for three straight weeks.

The main issue with the property is a large neighboring church parking lot that fills up on weekends, Rubenstein said. A year ago, during the height of the pandemic homebuying frenzy, a bidding war might have erupted. But now buyers have the luxury of being more choosey.

Homes across the Bay Area are staying on the market much longer. In Contra Costa County, properties are normally sticking on the market for 45 days, up from just 12 this time last year, according to Redfin.

Homes in good condition – with well-kept yards and modern kitchens and bathrooms – are still in demand, especially if they’re in desirable neighborhoods with good schools, Rubenstein said. “There are homes sitting on the market longer and taking reductions, but I’m also seeing multiple offers and houses going over,” he said.

As of Feb. 5, the median price for all homes – including single-family houses, condos and townhomes – was $1.34 million in San Mateo County, $1.29 million in Santa Clara County, $1.17 million in San Francisco County,

$894,000 in Alameda County and $671,000 in Contra Costa County, according to Redfin.

Prices across the five core Bay Area counties are down between about 5% and 10% compared to this time last year, and around 25% to 35% under their all-time high in May.

This winter, San Jose real estate agent Lynsie Gridley said she saw sellers cut asking prices by up to 5% in December and January – typically the slowest months for home purchases. The market ground to a halt during last month’s severe storms. But heading into the traditionally busier spring home buying season, house hunters are starting to return, Gridley said.

“We are seeing more people at the showings, and more offers coming to the table, but they’re not as substantially over list prices as they were a

See Price, Page 10

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