What will happen to East Bay mortgage rates, housing prices, and more?
With the rise in mortgage interest rates, the East Bay real estate market is beginning to change as red-hot conditions finally head back to normal.
While it’s still an active seller’s market, the situation is becoming more favorable to buyers day by day. While high home prices and affordability remain a challenge, the changing market is providing homebuyers with new opportunities and a much-needed reprieve from ultra-competitive conditions like an all-cash offer and waiving contingencies to get in the door.
Here’s what I’m telling my East Bay clients: We’re seeing homes on the market for slightly more days on average, and anecdotal evidence shows that buyers are leveraging some negotiation power for the first time in many years.
Here are four things you should think about when entering the East Bay Real Estate Market this year:
Buyers: Don’t wait for home prices to drop – We know the Federal Reserve is raising interest rates incrementally and is likely to raise them at least once more in the coming months. It remains a question whether a rise in interest rates will bring down pricing given the housing supply shortage in the East Bay. So, buyers should not necessarily wait for better deals, as interest rates will affect overall affordability, even if prices decline.
Sellers: Don’t count on home appreciation to rise at the same rate – Even though home prices will continue to grow, they won’t rise at the breakneck pace of recent years. Housing prices rose significantly in 2021 — a nearly 20% rise — a pace that experts say is unsustainable and will surely slow. The National Association of Realtors predicts housing prices will climb 5.7% in 2022, while Realtor.com says it’s more like a 2.9% rise.
Here’s what I’m telling my East Bay clients: There may be a slight correction in pricing here in the East Bay as the total number of bids on a house dwindles, but if anyone is expecting pricing to come down significantly, they may miss their opportunity altogether.
Consider how long you’ll be in the home, and what it means for your financing options – With the rise in interest rates, buyers need to be strategic when choosing a loan. When interest rates were in the 2% or 3% range, getting a 30-year fixed-rate mortgage was an easy decision. With today’s more expensive financing, it makes sense to think about how long you’ll be in the home.
For example, if you’ll be in the home for less than 10 years, you might want an adjustable-rate mortgage (ARM). The rate on an ARM is fixed for a certain number of years — for example, five, seven, or 10 years — then resets based on market conditions after the initial period. Always check with your lender for the best rates and terms specific to your situation.
Interview many agents before signing a contract – Buying or selling your home is a major decision and since the housing price surge of the past few years, millions of new agents have entered the scene. Be sure to talk to many agents to find someone who clicks. I believe your real estate agent should demonstrate their expertise in the local market, and set realistic expectations on home price and current conditions. They should lead you through the entire process, lay-out options specific to your scenario, and make themselves available to you for any questions that arise.
Remember that you are under no obligation to work with an agent until you sign an agreement. Though your relationship with your lender may not be as personal, you’ll want to have a conversation and vet them, too, before formally agreeing to work together. If you’d like to sit down and discuss your goals in real estate this year, I would love to see how my team can help you.
As a top producing agent with 20+ years of experience in the East Bay, I have helped hundreds of clients showcase and maximize the sale of their homes in the Greater San Francisco Bay Area and the counties of Alameda and Contra Costa, and my experience as a former appraiser allows me to help my clients understand the market. If you have any questions, I am here to be a resource for you.