June in Review
A Slow Return
The East Bay housing market in the 2nd quarter maintained a steady increase in both volume and home values. Although job security in the tech sector continues to pose a challenge, the overall economy is doing well enough keeping interest rates high - even increasing the last week or so. Surprisingly, despite higher rates, the current market feels relatively stable.
At 27% below sales activity one year ago, inventory remains very tight. So what might it take for inventory of homes to build the second half of 2023? If mortgage rates continue to climb, demand will slow and inventory will build up, much like it did the 3rd quarter of last year. But if mortgage rates stay under 7% or decrease, demand from home buyers will increase, available inventory will shrink and home prices will continue to be supported due to low supply. Although many feel lower mortgage rates increase inventory, the data suggests the opposite. Sellers are locked into such low rates.
At Different Price Points
Volume of homes priced between $1.5m and $3.5m have doubled since 2023’s 1st quarter and they tend to sell faster than those below $1.5m.
Although the increase in sales the last few months indicate buyers have adjusted to increased mortgage rates, shoppers will likely remain very sensitive to the affordability challenge. For those buyers under $1.5m, the rapidly changing rates will continue to create risk - I encourage my own buyer clients to continue weekly check-ins with their lender.
The East Bay’s median price of homes sold in June reached $1.48m - a decrease of 12.3% compared to last year’s record-setting peak. June’s pricing continues to show a stabilization and a positive signal as sales activity accelerated.
The East Bay is Resilient
July 4th 2022 began a market shift downward and it’s certainly possible this recovery could see another. However, home prices are no longer falling - they’ve stabilized due to limited inventory and the East Bay should continue to have the most number of transaction compared to other Bay Area counties.
The word resilient seems suitable to describe our East Bay market. It surprises me the price recovery we’ve seen this year despite persistent inflation and higher interest rates. Although I have never before seen buyers so sensitive to affordability due to interest rate volatility, buyer demand has been sufficient to maintain home prices - and there isn’t a sign of this changing anytime soon.
Please reach out to chat with your observations or questions.
May 2023 Full Market Report: East Bay Area
Covering 26 cities across Alameda and Contra Costa counties, my market report offers an in-depth view of market changes for single-family homes, condos, and townhouses.