SAN JOSE, Calif. (KRON) – Housing prices are on the decline in the Bay Area, but what does that mean as far as buying a home?

According to Zillow, houses sold in San Francisco dropped 35 percent from this time last year. The City of San Jose also saw a drop of 35 percent.

The fed raised interest rates over the last year, raising the cost of a mortgage. Senior Zillow economist Orphe Divounguy said that affects the Bay Area more than other places.

“Areas that are high-income, and high-income individuals tend to be very sensitive to changes in interest rates, they are very savvy consumers, you put all those things together you see a large decline in demand,” said Divounguy. He expects Bay Area housing prices to drop about 3.6 percent over the next year.

He said the pullback in the stock market has also decreased demand. He also noted more people are staying in their homes because they have locked in a good interest rate.

“They can afford to stay; they don’t have to sell their home,” said Divounguy said.

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Despite the decline in prices, homes remain out of reach for many in the Bay Area. However, if you can afford to buy, Divounguy said it could be a good time to buy if you plan to live in the home for a while.

“You are no longer facing bidding wars, so you have a little bit of breathing room, take your time and pick what you want to get into, might be a good time for someone who can still afford to buy in the same environment,” said Divounguy.