Fed Cuts Rates by 3/4 Point

This morning there is news that the Fed has cut interest rates by 3/4 of a point.  This should be good news for mortgage rates.  And if they do go down, it will make buying real estate in San Francisco even more attractive. 

During the last few months, I have observed two distinct markets in San Francisco.  In the Northern and Central neighborhoods, the market is still quite strong and prices are rising, and bidding wars still occur.  In the southern neighborhoods, it has become a buyers market--there is a glut of inventory and prices are dropping.

This past week, I saw a handful of great homes in Pacific Heights and Noe Valley and condos in Russian Hill, Nob Hill and Noe Valley that came onto the market with their first showing on Sunday, whose Sellers had received and accepted offers by the end of business on Tuesday.  Some of these received multiple offers.  Others just received and accepted one offer quickly.

At the same time, great houses in the southern neighborhoods of the city including the Excelsior, Portola, Ingleside, etc. are available and sitting on the market.  Prices have dropped in these neighborhoods in the last few years.  Some of these homes are great, and with good financing that might get even better, there are real opportunities.

The likely impact of a rate drop?  It will likely encourage more bidding on attractive properties in the still hot neighborhoods.  Why?  If buyers have a sense of what they can afford in their budget and with lower rates they can afford more, why not bid on the terrific home and win the bid?  And hopefully, for the rest of the San Francisco market, interest rates will drop and current homeowners may be able to re-finance and keep their homes (if rate adjustments were the problem) or the buying power of first time buyers or investors will move some inventory and the market will be a bit more balanced.

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