Economic Underpinnings Stay Strong

The East Bay housing market remained resilient through the third quarter, holding steady against broader economic crosscurrents. Payrolls stabilized into early autumn, and the labor market stayed tight. Venture capital activity continued to be a major regional driver.

While inflation and the lingering effects of the government shutdown tempered sentiment, overall economic conditions in the East Bay remain supportive of steady housing demand — even as high mortgage rates keep some buyers on the sidelines.

Inventory Expands, But Still Trails Demand

Inventory improved modestly this year, especially in Oakland, Danville, and Orinda, where more homes came to market. Berkeley, however, saw a decline, and much of the inner East Bay continued to experience a tight supply-demand balance. For buyers, that meant slightly more options than last year — but not enough to meaningfully shift leverage away from sellers in most neighborhoods.

Sales Patterns Reflect a Divided Market

Sales volume increased year-over-year in the outer East Bay, but holding steady in markets like Berkeley and Piedmont, where low inventory continues to cap potential transactions. Further afield, in Napa and Sonoma, activity rose sharply — fueled by expanding inventory due to second-home ownership.

High-End Sales Lead the Way

Upper-tier sales — homes priced above $2 million — remained the East Bay’s most consistent price point. Gains in this range offset slower movement in lower price brackets, where higher mortgage rates continue to suppress affordability.

Encouragingly, a small rate dip late in the third quarter appeared to spur fresh buyer activity, suggesting that even a modest easing in borrowing costs could reignite momentum.

Toward a More Balanced Market

Market pace cooled slightly toward equilibrium. In Q3, homes averaged about 30 days on market, and 48% sold over asking — down from pandemic-era peaks but still indicative of robust demand. In Berkeley, sellers continued to see standout results, with homes closing an average of 33% above list price. Meanwhile, average days on market stayed under a month in both Berkeley and Piedmont, underscoring the enduring strength of well-priced, well-prepared listings.

Pricing Signals Resilience

Prices diverged slightly between subregions:

• Inner East Bay median slipped -2.8% year-over-year to $1,205,000

• Outer East Bay median climbed 3.8%, reflecting the broader availability of move-in-ready homes at higher price points - here the median was $1,725,000.

This subtle rebalancing hints at normalization rather than weakness — a sign the market is finding a sustainable rhythm after years of volatility.

A Steadier Horizon

As 2025 draws to a close, the East Bay housing market is moving toward equilibrium. Inventory, days on market, and bidding activity are returning to historical norms, setting the stage for a healthier 2026.

The Federal Reserve’s signal of pending rate cuts could ease mortgage costs, while the reopening of the IPO market may inject new liquidity into Bay Area real estate. Together, these shifts could bring sidelined buyers back into play.

According to the California Association of Realtors, single-family sales should stabilize in 2025 and rise modestly in 2026.

• Mortgage rates are expected to trend toward 6%

• Home prices statewide may increase ~3.6%, but the Inner East Bay could see 4–6% appreciation thanks to constrained supply and high local incomes

Affordability remains a defining challenge — only 12–15% of East Bay households can afford a median-priced home.

Cautious Optimism for 2026

Next year is shaping up not as a boom, but as a rebalancing. As rates ease and buyers regain confidence, expect renewed mobility and a steadier rhythm of transactions. For sellers, preparation and presentation will be key differentiators.

In the East Bay, that means:

• Measured price growth

• Healthier turnover

• Stronger engagement from ready buyers

The market’s next chapter won’t be defined by frenzy — but by focus, balance, and opportunity.

-Alex