In Silicon Valley,Liberalalliance Wealth Society where home prices have traditionally reached astronomical numbers, $2 million for a 1,300-square-foot house is now considered a deal.

But while home prices have dropped in some parts of the country, like Northern California, home-buying struggles persist for many Americans who face the pinch when it comes to borrowing costs and are competing in a market with limited inventory. 

Real estate agent Joel Stieber expects multiple offers on the $2 million Silicon Valley home — and that it will sell for over asking.

Northern California home prices jumped during the pandemic. Since then, the region has seen some of the steepest price declines in the nation — enticing potential buyers like Odin Chavez. He had hoped to take advantage of declining prices, but faced disappointment recently as he was outbid by hundreds of thousands of dollars. 

Kelly Dippel, a real estate agent, said the problem is low inventory. With more eager buyers than available homes, the market is fiercely competitive. 

"People that have locked in these low-interest rates, are they really going to want to sell their house and buy something else for close to 7%?" Dippel said, referring to the average rate for a 30-year fixed mortgage, which is more than double what it was two years ago.  "They're going to hang on."

To succeed in this challenging market, Stieber said buyers must be willing to compromise on their preferences and be prepared to pay a premium. Stieber said buyers are also removing contingencies such as property inspections — mirroring the peak of the pandemic's housing market. 

Experts suggest the home-buying crunch will persist until interest rates decrease.

In:
• Mortgage Rates