So you have had your eye on buying a home in the East Bay and living the eclectic, good life. But you may be wondering if NOW is the time to make the leap. Waiting until now may actually have been a good thing as the spring market in the Bay Area is always the busiest and when you have more people looking, sellers can call the shots.

Here we discuss four reasons why NOW may be an advantageous time to get into a new home and start living that life that is coveted by people from around the world.

  1. Softening Market 

According to real-time real estate data company, Altos Research, the Market Action Index, which tracks sales vs inventory, for Berkeley and Oakland has dropped from July to August. This indicator shows that inventory is not leaving the market as quickly as it has over the course of the past several months. Altos shows that the average days on the market for Oakland is at 65 and Berkeley 59. Sellers are getting more realistic with their pricing in a softening market as 10% of homes in Berkeley have had price decreases while Oakland has had 23% of the total inventory of homes experience a price adjustment. With more inventory sitting for a longer amount of time on the market, the time is now to negotiate with motivated sellers.

“We are currently seeing homes priced at $1.9 million and higher sitting on the market,’ Tracy Sichterman, Broker/Owner Berkeley Hills Realty recently noted.

  1. It’s NOT 2008 

There are buyers who have been waiting for the housing market to have a major downward price shift. Yes, the general US economy is struggling to avoid a recession in the face of a trade war, however, there is a high unlikelihood of our market tanking, so don’t wait for prices to plummet next year due to the historic strength of the East Bay housing market coupled with the tenacity of our East Bay economy.  Another factor is that homeowners today have more skin in the game, thanks to the prevalence of cash buyers and the disappearance of 100% financing since the mortgage meltdown. More skin means we won’t have foreclosures driving the market down in the future. Additionally, those IPOs that everyone is talking about? Yes, they are keeping well-paid jobs in the Bay Area and other buyers with large down payments.

  1. Low Mortgage Rates Are Enticing 

Did you know mortgage rates dropped almost a point since this time last year? Let’s look at the impact of the rate on mortgage payments.

According to local mortgage pro, Melissa Milton, Guaranteed Rate, current 30-year fixed rates for a $500K mortgage are 3.75%, zero points. That monthly payment would be $2,316. Last year, this same mortgage would have had a rate of 4.75% and a monthly payment of $2,608 for principal/interest. That means the same loan costs 11% more at a higher rate than the lower rate.

Let’s say that if you are looking to keep the monthly payment – keep it at $2,316 – then at the higher rate of 4.75% on the 30-year fixed you would have to use a mortgage of $445K to purchase that home (instead of the $500K at 3.75%).

For a $1,000,000  loan, currently at 3.875% on the 30-year product, zero points, the monthly payment would be $4,702. If rates were to go up a point, then that same loan at 4.875% has a monthly payment of $5,292. That’s an increase to the cost of 12.5%. Or, to keep the monthly payment the same as $4,702 (or close to it), if the rate is 4.875% then you have to reduce the loan amount to $890K.

Good news-if you HAVE been waiting, you saved a point on your mortgage since last year and the cost of money is at a fantastic rate right now.

  1. The Volatility of the Stock Market Makes Real Estate A Solid Investment 

If you have been watching the DOW lately careen up and down based on fears of a trade war with China, you know the fluctuations are making investors nervous. When investors get nervous, they tend to put money into real estate. Right now, people are taking a “wait and see” approach, but with the tariffs scheduled to go into effect in September, people may get off the E-Ticket ride with stocks and decide, with lower interest rates, that now is the time to put the money into a home. Also, the trade war is exacerbating the price of new homes as Chinese made construction materials will be 10% higher by the end of this year on top of tariffs already imposed last year.

Additionally, higher construction material costs due to the tariff war mean that home remodeling costs continue to increase sharply and will rise even more when the next wave of tariffs hit.  Current homeowners who think they don’t want to be buyers, but would rather suffer through a major remodel are realizing that the remodel option is getting more and more expensive, making a home purchase more attractive.

We can sit down with you and discuss your home buying goals and find a home in the East Bay that fits the lifestyle you envision. We look forward to working with you.

If you would like to discuss interest rates and trends and mortgage information, Melissa Milton, VP of Mortgage Lending can be reached at melissa.milton@rate.com or (510) 344-5242.