Mike Simonsen, Chief Economist with Compass, shares what's happening in today's market and why it matters to you.
The Big Economic Shifts
By now you have likely seen the headlines. San Francisco is back. AI money is flooding in, bidding wars have returned, and for the first time in years, the Bay Area is generating net inbound migration rather than losing residents to lower-cost cities. Job creation is positive again. Even the condo market, which spent six difficult years finding its footing, is showing real signs of life.
What's less reported: Seattle and Austin, the two cities most often cited as Bay Area alternatives, are now sending more residents here than they're receiving. That's a meaningful reversal.
The force behind it is concentrated. This is an AI-driven wealth effect, playing out in a very defined geography: a pocket of San Francisco, the Peninsula, and Marin. Those markets are seeing demand that resembles 2021 in intensity. Lamorinda isn't in that headline cluster, but we are seeing our own version of this story. AI-industry families are choosing Lafayette, Moraga, and Orinda specifically for the schools, and that is showing up in buyer activity in our $3M+ luxury market.
What's Actually Happening with Home Sales
The national headlines don't always reflect what's happening in your own backyard. Here's what we're seeing in Lamorinda right now: median home price is $2.08M, up 1.5% year over year, with active inventory down 30% from this time last year. Homes are selling at 100.8% of list price. Prices are holding, but we remain substantially off the 2022 peak.
Interest rates continue to be the primary variable. In May, mortgage rates moved higher on inflation data that came in well above expectations, and the likelihood of a rate cut before year-end has diminished considerably. That pressure is real and doesn't appear to be temporary.
The tension between rising rates and broader wealth creation is the defining condition for the second half of 2026. Buyers who are equity-rich but rate-sensitive are recalibrating. Sellers who priced into spring optimism are adjusting.
None of this changes the fundamentals of our market. Lafayette's inventory remains constrained, demand from qualified buyers is steady, and well-prepared homes continue to perform. The homes that are performing are the ones that are priced right, prepared well, and marketed to the right buyers. That's where we focus.
What We're Actually Seeing
The data tells one story. What we're seeing on the ground, writing and reviewing offers every week, sometimes tells another. If you're wondering what any of this means for your home or your timing, we're happy to share what we're actually seeing. Just reach out.
