Warning of Price Spikes if Rates Drop

 










Warning of Price Spikes if Rates Drop - data on lender recession fears, stalled deals, and buydowns

Introduction: Market Overview

Data on lender recession, fear stalls deals, and buy downs. Let's get into this real quick. Part of the problem, what we're seeing right now is the market is slowing down just to tick. Houses are still selling, but. We're seeing price contraction, and that's important to understand because it's something that buyers have long wanted.

However, affordability is not something that is within the buyer's reach just yet. 





Current Market Trends and Buyer Behavior

Now, what's going on? I have houses on my block for sale right now, and they're just sitting there. One's actually been taken off the market because they're waiting for the next-door neighbor to sell their house.

I have another house coming up on this block, and I'm fully aware of going into this with that predicament. The good news is that the two houses are so different that I don't think we'll have that as a competition point. I do know the same floor plan has sold twice in the last month.

Same model, same actual elevation, and everything has sold for well above 1.7 and one just sold below 1.7. So we're in that price range. Buyers are getting flooded with propaganda, understanding that there might be a recession. What happens if there's a recession?

Prices tend to stay still or go up. It just happens that way, mostly because most investors take their money out of the stock market and put it into real estate because they know that's a strong place to put it. Now, 63% of loan officers say that the US is headed for a recession. That's two thirds, 57%.

Expect borrowers will delay home searches which is antithetical because when the market slows down, it's the best time to buy a house. Don't be a lemming. Period. 

Mortgage Rates and Concessions

Mortgage buy-down rates on the rise. Now that's the 3, 2, 1 thing, you have a nice cushy rate in the first couple we months or years, and then it goes back up to nominalized rates.

The hope is that by that time, the rates will come down so you can refinance. I don't play that game. I just bought a house, as an investment, so I got jacked on the interest rate, but I don't care because I need the investment. I need the write-offs. So concessions, very important.

Gone are the days when you get $400,000 over list price and two or three months free rent back and as is and no concessions, We're asking for concessions and now buyer's agent commission is considered a concession. So yeah, it's gonna go up. 

Pipeline Congestion and Inspection Findings

Pipeline congestion. 50% of lenders report that more deals are being canceled.

How many deals were canceled? If somebody does 10 refinances and 10 loans a month? How many of those have been canceled? One or two? Five, eight. How many actual loan applications are being canceled halfway through or midpoint?

Largely based on inspection findings, financing challenges, and buyer hesitation. Here in Santa Clara County, we do inspections up front. So we say we want an as-is offer. Your buyer still has the right and duty to have their own, typically, they're not gonna find anything different.

But the seller is unwilling to make those repairs or offer concessions to do that. More concessions are being made. Sellers, you need to get into the mindset that Concessions should be offered, accepted. That means your net out of pocket is gonna be less, but at the same time, selling your house at X versus X minus one or 2% is not so bad.

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Tariffs rise. Now, tariffs, good or bad, they're here. We're just gonna have to get used to doing it. Just like last year when the NAR got sued and buyer's commission got taken off the table, now the buyer has to ask for it or pay for it themselves. That hasn't changed anything, right?

Tariffs are a big alarm right now, but in a couple of months, it will go away because we have short memories. Lenders predict that if interest rates drop to an actionable level, prices could spike by an estimated 16%. For the last three years, when the market goes down, when the economy goes down, when the housing market slows down, that's the time for buyers to buy, not when you have to pay $400,000 over asking price.

Believe me, I've been doing this for 22 years now. Investors are waiting for the market to slow down to crash. So when rates go down, investors and more buyers are going to enter the market. You're gonna have more competition. 36% of loan officers say that buyers and sellers hope interest rates will rise to at least 5.75% before making a move. You can buy your rate down to that if it's going to be that big of a problem. If you're smart, you can use seller credits to knock that rate down.

I don't know if you're gonna get down to 5.75, but you're gonna get close. Because right now we're at seven. We're talking a nominal rate after a point is six and a quarter to six and three eighths, and that's where we are with that. Okay? 




America’s Housing Affordability Gap Persists

Housing Affordability and Inventory

Housing affordability gap persists. 

For sale housing inventoryis  up nearly 20% from a year ago, yet still far below pre-pandemic levels. US household earnings, $75,000 a year can only afford 21% of the home listings as of March 2025. pPartof the problem is that some people think that working at a fast food restaurant is a career.

It's not. It's a stepping stone. You should always be improving yourself. Get into a career that pays phenomenally. iIncomeso that you can afford to buy a house. Part of the American dream isn't a guarantee; it's a promise to life, liberty, and the pursuit of happiness.

It's the pursuit, it's the struggle. For sale, housing inventory increased nearly 20%. Nationwide. We have seen our inventory jump up greatly. We have a lot more homes for sale, even in Blossom Valley, which is good. We're seeing our days on market go up. Not so great, but it's good 'cause it makes it more of a balanced market.

Brings us closer to the six-month mark, which makes it a balanced market. Or the thousand homes that we're looking for in San Jose, or the 2000 homes that we're looking for to be fulfilled at any given time. Santa Clara County, to make it a balanced market, not a buyer's market. We're a seller's market, but a balanced market.

We must be at a balanced market because it takes the ego out of the seller, and it becomes fair play for both the last 20 years. It's been a seller's market up until 2008, and sellers expect and feel entitled to. And as is easy to deal, an easy transaction, a balanced market makes it so that it's fair and equitable for everybody. So this is a good article.You read it, it's from NAR There you go. 




Cupertino Home of the Week 

Featured Listings: Cupertino and Willow Glen

This is the Cupertino House of the Week. Not my listing. It's on Columbus Ave. Five bedroom, four bath, $4.5 million. It's right by Linda Vista Park, and that's Monte Vista and Kennedy Junior High.

I grew up there, so I know that area. This is nice. This is pretty. I'm not a big fan of the terracotta tile floors; it is what it is. So what you're looking at is semi-updated as they saw fit, not a fully turnkey house.

I showed houses yesterday, and you could tell right away what a flipped house looks like. They don't have the old style tile and travertine loo.k They just. Put in everything new. They put it in the fancy fireplace. The fancy laminate floor feels very plastic and fake to me. This house looks rich, lived in, maintained, and upgraded as they saw fit to fit their needs.





Willow Glen Home of the Week 

Now I wanna say that this is the same floor plan.Thiss is a standard floor plan. This is an addition here, but it's a standard. Shea Home is right there. Cupertino House of the week. Willow Glen. House of the week is Fiddler's Green, not my listing. The reason I chose this is that it's affordable.

$1.6 million, three bedroom, two and a half bath, 2000 square feet, built in 1980, and it is walking distance to downtown Willow Glen Lincoln. Let's take a look at the pictures. The house has been updated. I can tell you that this isan early 2000 update.

The photographer should have been a professional photographer, not the agent, and not their iPhone. You can tell completely. Thank you for doing the floor plan. It's so much easier when you can allow the buyer who's online to take a look at the floor plan to see if it actually fits their need.

At least it gets them in the mindset of it. And with a Matterport or a 3D 360 service, it allows you to walk through the house and get a feel for it before you actually go into it. So if you're buying it from outta state or outta the country, you get to actually see it. And then there are some highlight pictures,  




Luxury Home of the Week 

Luxury Home of the Week: Atherton

And then the luxury home of the week, Atherton, California, Stockbridge Ave. A mere $21 million, five-bedroom, six and a half baths. That's a lot of toilets to scrub. 8,700 square feet built in 2025. And if you're wondering where it is, it's right there.

Let's take a quick look at the picks.

See the difference between a house like this and a flipped house. I went into a ranch house that was like 1200 square feet, four bedrooms. Everything was brand spanking new. You could still see nail pops, nail dimples. It just felt plastic. This house looks like it's been completely updated.

Not a fan of the floors. Flooring guys tend to like to sell the LVP, which I'm not a huge fan of. But I like natural, I like the wood. I have engineered wood on my house, but it's more natural. I like. Granite. I don't like the courts. I have courts in my house. I'm not a big fan of that.

I wish they had more pictures of the kitchen. Two. There you go. I guess you have to go to the website to see more, $21 million. You'd think you'd have more than 20 pictures. But there you go. 

Conclusion and Final Thoughts


And nothing super duper is changing. I did add, median sales price. We can look at the differences between sales average and median, because there's a huge difference between median and average sales price.
The average sales price is the actual average. The median is the one that's most often done. If you look. It makes it feel more affordable, but you're still paying two and a half million dollars on average for a house in San Jose. And by the way, in Blossom Valley, an average house is $1.6 million.

Blossom Valley is one of the bbest-keptsecrets in Santa Clara County. It's nice, it's quiet, it's safe. We have police everywhere, and it makes you feel safe. Butin  Blossom Valley, there are not a lot of people rushing to get to Blossom Valley versus Willow Glen.

My opinion on that is because there's no downtown here in Blossom Valley. We do have Coronado, which is in the Village Oaks area. Months of inventory look like they're shooting up, but we're still in the middle of the month.

Once May equals out. You'll see that it goes up just a little bit here and there.

Thanks for watching. I'm Beto with Abano. We'll see you out there. 









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Vito Scarnecchia
Real Estate Broker, Veteran, Dad
DRE#: 01407676
408-705-6817
Vito@abitano.com
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🔴 Willow Glen's five most expensive homes https://youtu.be/3A_E2ck0ePg


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