By Liz McCarthy, Co-Founder, McCarthy + Moe Group
Interest rates have meaningfully improved from their recent peak, declining from the mid-7% range into the low-6% range, with periods dipping slightly below. Based on Federal Reserve guidance, inflation trends, and current bond market behavior, rates are likely to stabilize near this level in the coming months, with the possibility of modest downward movement rather than dramatic cuts. The era of ultra-low 3% mortgages is behind us, but we are now operating within a more stable and predictable range.
The most immediate impact of this shift is behavioral. For the past two years, many homeowners postponed selling because they were reluctant to exchange historically low mortgage rates for higher ones. That dynamic is beginning to change. Life events — growing families, downsizing, job relocations, and lifestyle transitions — are now outweighing rate considerations. As a result, more sellers are preparing to enter the market, increasing transaction activity even if inventory remains constrained by historical standards.
At the same time, lower rates have quietly improved buyer purchasing power by roughly 8–10% compared to late-2023 levels. (according to affordability mortgage calculators). In Marin County and across the Bay Area, we are already seeing renewed buyer engagement, particularly for well-located, move-in-ready homes. Demand remains strongest in desirable neighborhoods with access to San Francisco, strong schools, and quality housing stock. These properties continue to attract competitive interest because supply remains limited relative to long-term demand.
The Bay Area housing market is uniquely influenced by wealth creation tied to technology, financial markets, and increasingly, artificial intelligence. As confidence returns in those sectors, housing demand tends to follow. Unlike many parts of the country, Bay Area home values are less sensitive to small interest rate fluctuations and more closely tied to supply constraints and income growth at the upper end of the market.
Looking ahead, the most likely outcome is a gradual increase in market activity rather than a sudden surge or decline in home prices. Stabilizing rates provide psychological certainty, which is often more important than the rate level itself. Buyers and sellers can make decisions with greater confidence, and this clarity typically translates into stronger transaction volume.
In Marin County specifically, limited housing supply, strong local demand, and proximity to San Francisco continue to provide long-term support for home values. While interest rates remain an important factor, they are only one piece of a broader picture. The combination of constrained inventory, high desirability, and economic strength positions the Bay Area housing market for steady performance in the year ahead.
