2019 East Bay Real Estate Prediction: Strategy Counts

Economists are saying we are now seeing an “affordability ceiling”, as incomes are not able to support rising home prices. If the past is an indicator, when a market gets too hot, buyers go elsewhere or stay out of bidding wars, as not to get caught at the top of the market. Serious sellers need to price their homes with precision when they first come on the market instead of pricing with the hopes of multiple offers. The best return on your investment will rely on paying attention to three key factors; Price, Presentation and Promotion. As the strategy for pricing a home changes in 2019, so too will the standards of presentation. Market mini-flips may not make as much sense in 2019 as buyers take a more critical look at surface improvements. Getting your home to show its best is important as the days of “as is” are waning and with more competition from sellers thinking now is the time to sell, your home has to shine a little brighter. Berkeley Hills agents are trained to assess the home improvements that make the most sense in a changing market.

Buyers Will Remain Wary

As we mentioned last August, Bay Area real estate prices plateaued signaling a change in the market when buyers felt they were going to hang on the sidelines of a market that just seemed too hot or they were priced out of.

In 2018, activity slowed with – 2% fewer homes sold between 2017 and 2018. However, even with less homes sold, median home values in the East Bay increased 6% to $930,000. Affordability is a key factor: only 18% of Alameda County residents can afford to purchase a median-priced home (and need a $202k income to qualify) according to the 3rd Quarter report by the California Association of Realtors.

Will Rising Interest Rates Slow the Market?

The Federal Reserve increased interest rates a full percentage point between July and December and promised more for 2019. The interest rate hikes were geared to slow the market down and they did just that when buyers had 10-12% less buying power and had to choose less house, a different city or sitting on the fence waiting.

Mortgage Applications Are Popping! For 2019, economists have warned that changes to the tax code will have a negative effect on buyers with loans between $750,000 and $1,000,000. (As we reported when the tax changes first went into effect in 2018 (see link below)

The good news lately is that mortgage rates have actually FALLEN to a new 9 month low and homebuyers and homeowners are not wasting their chance to grab these savings. Total mortgage applications rose 13.5 percent from the previous week to its highest level since February 2018, according to data from the Mortgage Bankers Association’s applications survey for the week ending Jan. 11. Purchase applications climbed 9 percent — the highest level since April 2010 — and refinance applications jumped 19 percent over the previous week. This signals that homebuyers are willing to jump off the fence if the right conditions exist.

Will Sellers Flood The Market With Inventory?

In 2018, inventory remained tight, but as the summer market plateaued, more inventory remained on the market for longer and some sellers, thinking that the market had hit its peak, quickly put their homes on the market, giving buyers an edge for pricing.


Will this continue as a trend in 2019? If buyers are hopping off the fence to take advantage of a dip in the interest rates, it could re-energize the market this spring, bringing home prices up and inventory down which would help sellers who thought perhaps they missed the top of the market.

As our crystal ball can only forecast so far, we think that the spring market in the East Bay will remain strong for sellers, but depending upon market forces, summer could bring a cool down. As we all know, the Bay Area will remain a draw for jobs, education and lifestyle and there are no market indicators right now that would signal an impending recession.

If you would like to discuss the market further and get specific pricing on what your home is worth and a strategy to get it onto the market, please contact us.