Is this the year to consider purchasing a home in the East Bay? This could be the best year to do so in the past five years.
Here are three reasons we believe now is the time to buy a home in the East Bay:
- Rising inventory
- Reports from sellers
- Rising interest rates
|Berkekey Home Stats|
|Total Listings||Price Range||Avg. Price||Size Range||Avg. Size||Avg. Price / Sq. Ft.|
Low: 824 sq. ft.
High: 12,000 sq. ft.
|2,484 sq. ft.||$544 per sq. ft.|
Inventory has been the big real estate story of the last few years — or rather, a lack of inventory. A shortage of homes for sale, coupled with strong demand, have led to tremendous home-price gains in the last couple of years, especially in the Bay Area.
It has also led to fierce competition among buyers. In short, there are plenty of buyers in the market, but not enough properties to go around. Bidding wars and offers above the asking price have been common trends over the last two years.
More housing being built
An article from August 2016 that appeared in The Wall Street Journal:
“Over the past year, the East Bay, which stretches 10 to 60 miles to the east of San Francisco and Silicon Valley, is tied for the fastest growth in new-home developments among major U.S. markets. Sacramento came in at number three, according to figures from John Burns Real Estate Consulting.”
A recent report from the California Association of Realtors (C.A.R.) also showed signs of inventory growth. For-sale inventory rose in all nine counties from July 2015 to July 2016.
“Increased inventory in the East Bay market, through new home construction and sellers deciding to leave the market, could make it easier for buyers to find suitable homes this year”, stated Tracy Sichterman, Broker, Berkeley Hills Realty. “Higher inventory could also help create a healthier balance between supply and demand, which would be good for long-term market stability.”
Sellers May “Cash in their Chips”
“My agents and I have had our ears to the ground in the East Bay market and have spoken to quite a few potential sellers who are thinking now is the time to take the price appreciation they have realized during the past few years and move to other markets in the country like Denver, Portland and Seattle,” Ms. Sichterman shared. With home sellers deciding to “cash in their chips” this Spring, more inventory will become available and thus the high level of multiple offers would most likely recede.
“We have had such low inventory for so long, people were bidding up houses sometimes over 15% above asking price. I believe now is the time that the market will stabilize as more sellers place their homes on the market between the end of January and June and buyers will have a shot a making an offer without having to compete in a bidding war,” Sichterman explains.
According to C.A.R. president Pat Zicarelli, “Some regions, such as the Bay Area, are seeing an uptick in inventory as high prices are motivating sellers to list their properties for sale.”
Rising Mortgage Interest Rates
Rising interest rates could also affect the East Bay housing market in 2017. The Mortgage Bankers Association (MBA) expects mortgage rates to rise gradually between now and the end of the year. Freddie Mac expects the same.
Here is the MBA’s quarterly outlook for the average rate on a 30-year fixed home loan:
- Q3, 2016: 3.5%
- Q4, 2016: 3.7%
- Q1, 2017: 3.9%
- Q2, 2017: 4.1%
- Q3, 2017: 4.3%
- Q4, 2017: 4.4%
In short, 2017 may be the time to avoid the higher cost of homes in San Francisco, San Mateo County and Silicon Valley, and buy in the East Bay where you can get more home for your dollar.
If you are in the market for a home, we can send you active listings as they enter the market via email. Just give us a call or email and we can put you on an email list.