Last week, rates on 30-year-fixed mortgages hit their lowest levels in four months after surpassing 7% in October. The volatility in mortgage rates caused by Federal Reserve interest rate policy, among other factors, has cooled the U.S. housing market in some cities more than others. 

For an on-the-ground look at how it’s played out in markets disrupted by the pandemic buying frenzy of 2020 and 2021, Marketplace checked back in with real estate agents in San Francisco, the Lake Tahoe region and Missoula, Montana. 

San Francisco

“Usually, San Francisco is so solid that you just know things are going to roll along,” said Cynthia Cummins, owner and principal agent with Kindred SF Homes. “Now, everything has changed.”

Cummins said median sale prices for single-family homes in San Francisco are similar to where they were at the beginning of 2022. But between then and now, there’s been a lot of movement. “Things went crazy in April and May, and then there was this sharp drop-off,” she said. 

With interest rates higher and layoffs hitting the Bay Area’s tech sector, Cummins said homebuyers aren’t competing quite as hard as they were just a few months ago.

“We’ve had some sales recently with multiple offers, like 12 offers on a property still,” she said. “But the difference between the lowest and the highest of those offers has shrunk a lot.”

Tahoe City, California

Similarly, the number of buyers interested in property in the Lake Tahoe region has shrunk significantly, according to David Westall, an agent with Sierra Sotheby’s International Realty in Tahoe City, California. “There’s a lot of fear, uncertainty and doubt, which always created hesitation for buyers,” he said. 

Despite that, Westall said homes are still near peak market pricing. “We have a lot of sellers in our market that are sitting on piles of equity … and they’re not motivated to sell,” he said.

Rising interest rates have dissuaded many would-be sellers who benefited in the low-rate environment of the previous decade from putting their properties on the market.  

Meanwhile, Westall said the flow of people moving into the region has slowed down as some companies call their workers back to the office. “It’s created a market that’s slow-moving,” he said. 

Missoula, Montana

In 2020 and 2021, many remote workers from densely populated cities bought properties in mountain communities like Lake Tahoe and Missoula, Montana. “It’s like a faucet was turned all the way to the right,” said Mindy Palmer, an agent with Berkshire Hathaway Montana Properties, referring to the flow of people moving in over the past couple of years. “And right now, there’s a drip. Things are still happening, but it’s a real head turner — if not a head-spinner — for people,” she said. 

With fewer buyers coming in, Palmer said there’s been a shift in power from sellers to buyers. “The sellers that were on the fence just a few months ago are shocked to find that they don’t have quite the same power that their predecessors did,” she said. 

As a result, Palmer said many people are waiting to see what happens with the spring market before pulling the trigger on buying or selling a property. 

“As agents, we get asked all the time, ‘What do you think the market is going to do, Mindy?’ And I tell them, tongue-in-cheek, ‘My crystal ball has been in the shop for the past 25 years. I don’t know what this year is going to bring.’”

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