As a top real estate agent in San Francisco for over a decade, clients often ask me if it still makes sense to buy a home here given rising mortgage rates. In fact, I was asked that question on two separate occasions just yesterday. My take? Buying in San Francisco can absolutely still be a solid investment, even with interest rates topping 5% this year.

In my experience, prices continue climbing in San Francisco regardless of higher rates. Inventory is extremely limited, and demand isn’t slowing down anytime soon. I counsel my buyers that if they wait, their dream home will likely become even more unattainable price-wise. Yes, monthly costs will be higher than a couple years ago on the same priced house. But in a city as unaffordable as San Francisco, buying is one of the only ways people can stop throwing money down the drain on high rents and build tangible equity. 

At the end of the day, owning a home here means forced savings as well as numerous tax deductions. As rates increase, I advise clients to run the numbers conservatively and not overextend their budget. While prices could drop if we enter a recession, it doesn’t seem likely we would have significant declines given the extreme housing shortage. My guidance is to act quickly and decisively when the right home comes along, as competition still exists in certain neighborhoods.

Navigating the complex mortgage landscape is key. So keep these key factors in mind:

• Paying points for a lower rate – Calculate if the upfront cost will be offset by savings over time. If it takes more than a year to recoup the costs, it may not make financial sense given predictions that rates could fall.
• 30-year fixed vs adjustable rate – While fixed rates offer stability, adjustable rate mortgages often start out a bit lower. Consider which fits your budget and goals better.
• Down payment amount – Putting 20% down isn’t always necessary. With a lower down payment, you can keep more cash on hand while still securing a competitive rate. Explore your down payment options.

I have built relationships with trustworthy mortgage advisors who can walk you through all the options to create a personalized financing plan. Their expertise will equip you with the knowledge to make smart, informed decisions when purchasing your San Francisco home.

Leaning on my decade-plus experience as a top area agent, I provide one-on-one guidance to match your financial situation and real estate goals. My hope is that all who desire to become Bay Area homeowners are empowered to do so. Though higher rates present challenges, the wealth-building power of owning San Francisco real estate remains for those willing to take the plunge. Reach out anytime . I am here to help your homebuying dream become reality.