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Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, LIC #01463395

The Big Picture

Quick Take:


Early innings for rising rates

Mortgage rates rose faster than expected in the first quarter of 2022, already surpassing forecasts for the year. The 30-year average mortgage rate rose swiftly in the two weeks after the Fed’s March meeting, up 0.5% between March 17 and 31 to 4.67%. This rapid increase has spurred purchases as buyers try to lock in lower rates before they climb higher. The data reflect the urgency buyers face. Nationally, home prices have reached yet another milestone: hitting above $200 per square foot, the highest level in history. But is the urgency justified? The answer is 100% yes, assuming you find the right home for you. Let’s dig into the numbers a little.

Housing Prices and Inventory in the United States April 2022 East Bay Market Update



The average 30-year mortgage rate was 3.11% in December 2021, rising to 4.67% by the end of Q1 2022. If you bought a home in December and financed it with a $500,000 mortgage loan at 3.11%, your monthly spend on principal and interest would be $2,138 — versus $2,584 if you got the same loan in March 2022 at 4.67%. Over the life of the loan, you’ll spend $160,560 more at 4.67%. In short, every percentage point matters significantly. As an aside, refinancing has decreased 60% below last year’s levels, according to the Mortgage Brokers Association. Economists and real estate experts seem torn between rates peaking just below or just above 5%.

Inflation's Effect on Rates (Long History) April 2022 East Bay Market Update

Because the Fed indicated the path of rate hikes for the rest of the year, mortgage rates increased in anticipation and are likely to be affected less when the Fed moves the federal funds rate in the future, if it sticks to its schedule. At this point, we can almost guarantee that rates will not decline substantially this year.

Inflation's Effect on Rates (Zoom In) April 2022 East Bay Market Update



As we look at historical trends in inflation, we are curious about how effective the Fed’s rate hikes will be. Rates rose significantly in the 1970s, partially due to the inflation rate at the time. Mortgage rates peaked at over 18%, which is unimaginable today. As we look at the long-term data, we see that inflation tends to decline when the federal funds rate is above the inflation level. Currently, the federal funds rate is far below inflation, and the Fed doesn’t plan to lift it near the inflation level because of the economic shock that would ensue. The current cost to borrow is actually negative, which may incentivize more people to borrow and spend more in the short term, driving inflation higher. At current mortgage and inflation levels, the borrower, not the lender, gains around 3% from borrowing.

Median Days on Market in the United States April 2022 East Bay Market Update



In addition to rising rates, supply still drives home prices. In March, the housing supply ticked up ever so slightly from the all-time low in February. We are entering the spring buying season, however, with the lowest inventory on record. From March 2020 to March 2022, the housing supply declined 62%. Over the past three months, which had the lowest inventory on record, home prices increased nearly 10%. Rising rates, in the short term, boost demand because potential homebuyers want to get ahead of the increase, but in the long term, they reduce demand. Because the market is so undersupplied, less demand is actually a good thing. Home prices simply cannot maintain the rapid increases. Although a housing bubble isn’t likely yet, a sustainable growth rate is better and safer for the long term.


The Local Update

Quick Take:


Home Prices Close the First Quarter at Record Highs

Single-family home and condo prices rose significantly over the last two months, reaching all-time highs for single-family homes for Alameda County, while Contra Costa prices landed just below peak. Because sales often have a one-month lag, with homes going under contract around a month before the sale is complete, we cannot yet determine how significantly increasing rates have hit the market. Mortgage rate hikes really only lower demand in the long term, but in the short term, demand increases as buyers try to lock in a lower rate. The East Bay housing market has a major advantage in that high demand is constant. Despite the huge increases in home prices over the past 12 months, the lack of housing supply will keep prices rising in the coming months.  

April 2022 East Bay Median Home Prices



The Fed is expected to raise interest rates by 0.25% at least six times this year, going from 0% to 1.90%. We are now entering a period where factors that affect prices are more mixed, unlike the past two years when all the factors caused prices to increase. Rising interest rates, which will hopefully curb the still-rising, 40-year-high inflation rate, will make homes less affordable and dampen demand over the course of the year. But inventory is so low that even with less demand, the market will likely remain undersupplied. It might seem counterintuitive that home prices can still appreciate after increasing so much over the past two years, but with inventory at record lows, home prices in 2022 will still increase — though at a slower rate than in 2021. With high sales relative to the available inventory, we anticipate a competitive market in the year ahead.

Low, but RISING inventory

The East Bay, like the rest of the country, has a historically low housing inventory. The sustained high demand and lack of new listings over the past year brought single-family home and condo supplies to record lows across markets. Although the first quarter of 2022 had the lowest inventory on record, we are pleased to see that inventory is increasing. If this upward trend continues into the second quarter, that will be a large indicator that the housing market is normalizing. 

April 2022 East Bay Single-Family Homes Inventory
April 2022 East Bay Condos Inventory


Sales have still been incredibly high, especially when accounting for available supply, again highlighting demand in the area. Sellers can expect multiple offers, and buyers should come with competitive offers. The incredibly high demand we’ve seen over the past year might wane as interest rates increase; however, the supply is so low that the market can handle a drop in demand without negatively affecting prices. The 30-year average fixed-rate mortgage hasn’t climbed above 5% yet, but it almost certainly will. If mortgage rates reach 5%, demand will likely decline more substantially. In the next few months, demand will remain high relative to available supply.

Months of Supply Inventory further indicates high demand and low supply

Homes are selling extremely quickly in these luxury markets. Buyers must put in competitive offers, which, on average, are 16% above the list price for single-family homes and 6% above list for condos.

April 2022 East Bay Months of Supply Inventory

 

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes for sale on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than that indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Currently, single-family home and condo MSIs are exceptionally low, indicating a strong sellers’ market.

April 2022 East Bay Months of Supply Inventory by County

What’s next?

Home prices will likely continue to rise, as well as the mortgage rates. But we’re seeing a window for change so make sure you stay tuned for our market updates or follow our socials to get the latest news.

We keep ourselves updated with the latest news and updated data so that you won’t have to. If you need to talk to a real estate professional to fully understand the market and how you can proceed with your housing plans, don’t hesitate to call 925-415-0835 and our team will take care of you!

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, LIC #01463395

The Big Story


AMPLIFIED Seasonal Trends

Before the pandemic, seasonality in the housing market was something everybody expected: prices rose from January to June (with low but rising inventory), and flattens from July to December (with high inventory but declining).

Things are different since January 2020. Home inventory hit the record low with just over a million homes available in the market. Then the pandemic hit and there became a huge demand for homes, further declining the inventory to shockingly low levels.

From January 2020 to June 2021, inventory decreased by 49% and prices increased by 32%! This led to doubling the price increase of the previous 3 years combined. By January this year, inventory had reached an all-time low by a 60% decrease, and prices reached the record high by 34%!

Homes are getting sold much faster and in a more efficient way. Even before the pandemic, homes are selling quickly because of technology and increased competitive market. Increased efficiency match right people with the right home quickly, making the inventory drop faster while new homes are not being built.

MSI, which quantifies the supply-and-demand relationship, is at a record low, further indicating a sellers’ market.

The low supply,

high prices,

and speed of purchases

have shifted homebuyer makeup. 


The number of first-time buyers dropped 6% over the past year, while sales to investors rose 7%. All-cash offers increased significantly, often disproportionately affecting first-time buyers, who are most likely to need financing.

With rising mortgage rates, many first-time buyers will once again be hit hardest with higher monthly payments. Rates have already risen, because the Fed is expected to start increasing rates in mid-March, and they will only climb higher. Because of the rising cost, the average age of homebuyers is climbing. The average first-time buyer is now 33 years old, and the average repeat buyer is 56 years old, an all-time high. As we enter a new chapter in the housing market, one characterized by rising rates and very low supply, demand can only go one direction: down. But for now, prices aren’t in danger of declining. 

Over the next several months, we expect supply to matter more than the interest rate hikes when it comes to home prices. Economists anticipate that the Fed will start the first of six incremental 0.25% increases in March. The Fed uses interest rates in particular as a tool to meet its dual mandate of maximum employment and price stability. With inflation at a near-40-year high, prices for most goods are rising while incomes are not. This situation gives the Fed little choice but to raise interest rates. Essentially, when the cost to borrow increases, fewer people want to borrow, leading to less consumer spending (less demand), which lowers prices.

As we enter this new chapter of rising mortgage rates, we don’t expect home prices to decline significantly, if at all, because supply is still such a driving factor. The low supply means that demand can decline without negatively impacting prices. We don’t expect home prices to appreciate at the record level we experienced over the past two years, but we do expect to see an increase. We are still in the middle of one of the strongest sellers’ markets in history. Buyers must come in with fast, competitive offers in this environment.


The Local Updates


Home prices hit record highs in front of Fed rate hikes

Single-family home and condo price per square foot rose to all-time highs in February 2022 in the East Bay. Mortgage rate hikes really only lower demand in the long-term, but in the short-term, demand increases as buyers try to lock in a lower rate. The East Bay housing market has a major advantage in that people simply want to live there.

The East Bay tends to have high employment rates, racial diversity, and a growing population of affluent young professionals.

This tends to have a snowball effect, making these areas more and more desirable places to live. Despite the huge increases in home prices over the past 12 months, the East Bay’s lack of housing supply will keep prices rising in the year to come.   

The Fed is expected to raise interest rates by 0.25% six times this year, going from 0% to 1.50%. We are now entering a period where factors that affect prices are more mixed, unlike the past two years when all the factors caused prices to increase. Rising interest rates, which will hopefully curb the still-rising inflation, will make homes less affordable and dampen demand over the course of the year.

But inventory is so low that even with less demand, the market will likely be undersupplied. It might seem counterintuitive that home prices can still appreciate after increasing so much over the past two years, but with inventory at record lows, home prices in 2022 will still increase — though at a slower rate than in 2021.

With high sales relative to the available inventory, we anticipate a competitive market in the year ahead. 

Record-low inventory persists

The East Bay, like the rest of the country, has a historically low housing inventory. The sustained high demand and lack of new listings over the past year brought single-family home and condo supplies to record lows across markets.

We are seeing that far more people want to live in the East Bay than want to leave.

Sales have been incredibly high, especially when accounting for available supply, again highlighting demand in the area. Sellers can expect multiple offers, and buyers should come with competitive offers. The incredibly high demand we’ve seen over the past year might wane as interest rates increase; however, the supply is so low that the market can handle a drop in demand without negatively affecting prices.

The 30-year average fixed rate mortgage hasn’t climbed above 4% yet, but it almost certainly will as the Fed starts raising rates. If mortgage rates reach 5%, demand will likely decline more substantially. In the next few months, demand will remain high relative to available supply.

Months of Supply Inventory (MSI) further indicates strong sellers’ market

Homes are still selling extremely quickly. Buyers must put in competitive offers, which, on average, are about 5–13% above list price.



Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes for sale on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than that indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). Currently, single-family home and condo MSIs are exceptionally low, indicating a strong sellers’ market.

The market is very hot right now. If you have any further questions about the market, the perfect time to buy or sell a home, or are in need of a real estate professional, give us a call at 925-415-0835!

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, LIC #01463395

The Big Story

Mortgage Rate Hikes Now Definite

Quick Take:

The Fed Dual Mandate

On January 26, 2022, the Federal Reserve (the Fed) indicated that it would raise the federal funds rate as soon as March for the first time in over three years. The Fed adjusts the federal funds rate to influence broader interest rates, which directly affect the borrowing costs of banks. Generally, if bank borrowing costs are low, consumer borrowing costs will be low(er), and vice versa. The Fed uses interest rates in particular as a tool to meet its dual mandate of maximum employment and price stability. Employment and price stability are long-term indicators for home prices. 

We will start with the good news. Employment rebounded considerably from the highest spike in unemployment in modern history in spring 2020 to pre-pandemic levels by December 2021. As you might imagine, high unemployment rates for extended periods lead to less overall wealth: Fewer people buy homes, and more people experience foreclosures, thereby lowering home prices. Although unemployment seemed dire in 2020, employment is now on solid ground. If we view the current record-high 10.5 million job openings, along with the nearly 10 million new businesses created over the past two years, we get a better understanding of why unemployment dropped so significantly despite a record number of job openings. Simply put, people are working, and that is good for individual wealth and the larger economy. 

Bay Area February 2022 Market Update Us Unemployment Claims



On to the kind-of-good, kind-of-bad news … rising mortgage rates could help curb inflation and create a more balanced housing market (although 2022 will surely be a sellers’ market), but it will make homes more expensive monthly, hitting first-time homebuyers the hardest. With the federal funds rate at 0% and inflation at a near-40-year high, rate hikes are expected to combat inflation. Essentially, when the cost to borrow increases, fewer people want to borrow, leading to less consumer spending (less demand), which lowers prices. We can look to the last inflationary period, the 1970s, as a loose guide. Inflation today is likely to be much more transitory than it was in the 1970s, but we can still expect a rise in mortgage rates like we saw then. Luckily, however, we will certainly not reach the 18+% mortgage rate that we saw in the early 1980s. As it was then, the Fed is obligated to do something now. While we wish that we could always be in periods of high employment, low inflation, and low-interest rates, as we experienced for nearly a decade before the pandemic, we must recognize the atypical nature of that period. 

Inflation's Effect on Rates Bay Area February 2022 Market Update


As we enter this new chapter of rising mortgage rates, we don’t expect home prices to change significantly, if at all, because supply is still such a driving factor. In December 2021, there were 57% fewer homes on the market than in December 2019. The low supply means that demand can decline without affecting prices. Does it matter if 10 offers drop to five? Probably not, and it might even create a better market. Sellers tend to become buyers, so unless you’re a first-time homebuyer, you’ll likely experience both sides of the market. Because sellers are often selling one home and buying another, it’s essential that sellers work with the right agent to ensure the transition goes smoothly. 

Housing Inventory in the United States Bay Area February 2022 Market Update


We don’t expect price appreciation to see the record gains we experienced over the past two years, but we do expect home prices to increase. Another factor at play over the past two years was a sharp increase in disposable income, which has now normalized. People had more money to spend over the past two years, and we saw that throughout markets: The housing market, the stock market, cryptos, art, jewelry, etc. all reached record high prices. As disposable income has dropped to a more normal level, we can expect assets to appreciate at a more normal pace.

If you have 30 minutes, Ray Dalio’s video How the Economic Machine Works is well worth watching.


The Local Lowdown

Quick Take:


Home price movements in a rising rate environment

The single-family home market in the Bay Area began the year below all-time highs as the market cooled from the huge price gains at the beginning of 2021. After prices appreciated significantly in the first half of 2021, it made sense that price appreciation slowed or reversed in the second half of the year, a trend that has continued into 2022. The housing market in the Greater Bay Area, however, has a major advantage in that a high number of affluent people simply want to live there, which has reduced inventory to record lows. 

Condo prices have held relatively stable over the last several months with the exception of San Francisco condos, which declined sharply from the November peak. After digging into the San Francisco January data, we found that a higher-than-usual number of smaller condos were sold, and that condo prices weren’t actually falling. The pandemic hit demand for condos harder than single-family homes in the Bay. However, sales indicate that demand is back, although we expect price appreciation to slow as we move through the winter months, a seasonal norm.

Mortgage rate hikes really only move demand in one direction: lower. We are now entering a period during which factors that affect prices are more mixed, unlike the past two years when all the factors caused prices to increase. Rising interest rates, which will hopefully curb the still-rising inflation, will make homes less affordable and dampen demand. But inventory is so low that even with less demand, the market will likely be undersupplied. It might seem counterintuitive that home prices can still appreciate after increasing so much over the past two years, but with inventory at record lows, home prices in 2022 will still increase — though at a slower rate than in 2021. 


Record low inventory in the Greater Bay Area

We entered 2022 with historically low inventory. The sustained high demand and lack of new listings over the past year brought supply to record lows across markets. We are seeing that far more people want to live in the Bay Area than want to leave. Sales have been incredibly high, especially when accounting for available supply, again highlighting demand in the area. Sellers can expect multiple offers, and buyers should come with competitive offers. The high demand we’ve seen over the past year might wane as interest rates increase; however, the supply is so low that the market can handle a drop in demand without negatively affecting prices.

Greater Bay Area Days on Market Bay Area February 2022 Market Update

Months of Supply Inventory further indicates high demand and low supply

Homes are still selling extremely quickly. The Days on Market reflects the high demand for homes in the Greater Bay Area. Buyers must put in competitive offers above the list price of the home.

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). In January, MSI remained exceptionally low in the Bay Area, indicating a strong sellers’ market. Notably, the January increase in MSI is less instructive than usual — sales slowed because inventory is so low, not because of lack of demand.

East Bay Days on Market Bay Area February 2022 Market Update
MSI by County Bay Area January 2022 Market Update

The market is very hot right now. If you have any further questions about the market, the perfect time to buy or sell a home, or are in need of a real estate professional, give us a call at 925-415-0835!

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, LIC #01463395

The Big Story

New Year, Same Housing Market

Quick Take:

The Local Lowdown

A cooling market means more room to run in 2022

Quick Take:

THE BIG STORY

Will the housing shortage reverse?

The driving force behind the substantial price increases over the past two years has been the supply of homes, or lack thereof. So, will the housing shortage reverse? The answer is no, as there is no reasonable scenario that would bring active listings to pre-pandemic norms.

Before February 2020, seasonal inventory typically peaked in the summer months, but it was trending slightly lower each year. In 2016, inventory peaked at 1.55 million active listings, and by 2019, the peak fell to 1.35 million homes.

Housing Inventory in the United States Bay Area January 2022 Market Update

Inventory in 2021 reached its highest point at approximately 621,000, a 54% decline over two years. Homebuilders simply cannot build fast enough, especially in sought-after urban areas that have already been developed, and new listings are peaking far lower than the historical seasonal norms. 

At the same time, we are on pace to see around a million more homes sold in 2021 than in a typical year, based on the long-term average. In other words, more homes are selling, despite the historically low inventory, which is further driving down inventory. In 2022, we expect demand to remain elevated and supply depressed, which should keep home prices from depreciating. 

New Listings in the United States Bay Area January 2022 Market Update



Price appreciation likely will not see the record gains we experienced over the past two years, which is actually good. If we learned one thing from the mid-2000s, we know that we don’t want another housing bubble. The deceleration in price increases, therefore, actually benefits the current market.

From a practical standpoint, home prices rising at 20% per year is unsustainable and would certainly cause a major collapse. Moving through 2022, we expect year-over-year price increases to move back to historical norms, in the 5–10% range. 

Fed rate hikes in 2022 could drastically affect appreciation as well, which, again, isn’t a bad thing. The low-cost financing the past two years could be coming to an end (although it’s difficult not to take a believe-it-when-I-see-it-approach to rate increases).

When we account for current inflation, which is the highest it’s been since 1981, the real rate of borrowing is negative if you borrow at a rate below 6.8%. Simply put, you’re getting paid to borrow! We don’t expect this phenomenon to last long — it’s a fairly unique situation.

The market remains competitive for buyers, but conditions are making it an exceptional time for homeowners to sell. Low inventory means sellers will receive multiple offers with fewer concessions. Because sellers are often selling one home and buying another, it’s essential that sellers work with the right agent to ensure the transition goes smoothly.


Want to know the value of your home? Click here.


THE LOCAL LOCKDOWN

Home prices still have room to run in 2022

After single-family home prices appreciated significantly in the first half of 2021, it makes sense that prices would decline in the third and fourth quarters. North and East Bay prices experienced the most substantial decrease in the second half of the year, although all regions declined. However, as inventory continues to decline, as is typical in the winter season, prices will likely increase. 

Condo prices declined less significantly in the second half, and San Francisco condos increased to a record high in November. This is the first new high we’ve seen in over a year in San Francisco. The pandemic hit demand for condos hard, but price and sales indicate that demand is back. Although the price appreciation wasn’t as pronounced for condos as it was for single-family homes, we expect price appreciation to slow as we move through the winter months, a seasonal norm.

Greater Bay Area Median Price Changes Bay Area January 2022 Market Update

Nearing record low inventory once again

Despite the slight increase in single-family home inventory in the first half of 2021, the sustained high demand and lack of new listings in the second half brought single-family home and condo supply to near historic lows. Once again, we are seeing that far more people want to live in the Greater Bay Area than want to leave. Sales in the Bay Area have been incredibly high, especially when accounting for available inventory, again highlighting demand. Sellers can expect multiple offers, and buyers should come with competitive offers.

East Bay Inventory of Single Family Homes Bay Area January 2022 Market Update

Months of Supply Inventory further indicates high demand

Homes are still selling extremely quickly. The Days on Market reflects the high demand for homes in the Greater Bay Area. Buyers must put in competitive offers above the list price of the home. 

Days on the Market November 2021



Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes for sale on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). MSI in the Greater Bay Area is historically low for single-family homes and condos, indicating a strong sellers’ market.

Greater Bay Area Months of Supply Inventory Bay Area January 2022 Market Update

There are a lot of things happening this 2022. If you have any further questions about the market, or are in need of a real estate professional by your side at all times, don’t hesitate to give us a call at 925-415-0835!

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, LIC #01463395


The Big Story

What to expect when you’re expecting inflation

Quick Take:

The Local Lowdown

The housing market cools after a white hot year

Quick Take:

THE BIG STORY

Inflation: Short-lived or long-term?

By now, you’ve likely run across a headline regarding the large inflation jump we’ve experienced over the past six months. Even if you haven’t, you’ve probably noticed a general increase in prices for things like gas and food over the past couple of months.

The last significant long-term inflationary period was in the 1970s when inflation expectations created a feedback loop largely because unions were common and had more bargaining power. As prices rose, union workers demanded higher pay, which increased operating costs and fueled rising prices.

inflation market update bay area

But 2020-21 is quite different from the 1970s. Currently, companies are using inflation as a mostly bad-faith excuse to raise prices during a time of record corporate profits, which will benefit companies as consumers bear the burden of rising costs. This is likely the unfortunate feedback loop we will see during the next six months.

Case-Shiller 20-City Composite Home Price Index East Bay December 2021 Market Update

All that to say, as consumer costs rise, we might see demand for housing decline. With fewer experiences to spend money on during the pandemic, savings shot up, allowing potential homebuyers to reach their down payment goals far more quickly than expected. Inflation will cut into our ability to save. 

Corporate Profits East Bay December 2021 Market Update


Unlike a normal business cycle, the pandemic is still disrupting the global supply chain, with fewer dock/port workers and truck drivers as well as continued international travel restrictions. This is compounded by the pandemic-related shifts in consumer preferences: consumers are choosing physical goods rather than services. The demand for physical goods isn’t unique to the U.S., either — the whole world is trying to recover economically with a move toward physical goods, which is stressing the supply chain. The good news, however, is that inflation will likely fall around summer 2022 and shouldn’t mimic the decade-long inflationary period of the 1970s. The bad news is that it isn’t coming down today.

Total Existing Home Sales in the United States East Bay December 2021 Market Update



Although not necessarily a strict supply chain issue, the rising cost of housing can definitely be tied to supply. In the U.S., the supply of houses for sale is still near the all-time low reached in April. At the same time, demand remains high for homes, and we are on pace to have around a million more homes sold in 2021 than in a typical year, based on the long-term average. In other words, more homes are selling despite the historically low inventory. Because inflation diminishes the purchasing power of a dollar over time, buyers face pressure to buy sooner rather than later, further increasing demand for homes. Coupling inflation with historically low mortgage rates creates incentives to buy now even with the run-up in prices.

The market remains competitive for buyers, but conditions are making it an exceptional time for homeowners to sell. Low inventory means sellers will receive multiple offers with fewer concessions. Because sellers are often selling one home and buying another, it’s essential that sellers work with the right agent to ensure the transition goes smoothly. 

15 and 30-Year Fixed Mortgage Rates East Bay December 2021 Market Update

THE LOCAL LOWDOWN

Home prices hit a ceiling (mostly)

After single-family home prices appreciated significantly in the first half of the year, it makes sense that prices are declining in the third and fourth quarters. North Bay prices experienced the most substantial decrease in the second half of the year, although all regions declined. That said, the East Bay, Silicon Valley, and San Francisco showed remarkably consistent price appreciation for the year, up 19% across those regions.

Condo prices declined less significantly in the second half, except for the North Bay condos, which rose to a record high. Although the price appreciation wasn’t as pronounced for condos as it was for single-family homes, we expect price appreciation to slow going into the winter months, a seasonal norm.

Greater Bay Area Median Home Price East Bay December 2021 Market Update
Greater Bay Area Median Price Changes East Bay December 2021 Market Update
Bay Area Regions' Median Prices - Single-Family Homes East Bay December 2021 Market Update
Single-Family Home Prices by County East Bay December 2021 Market Update
Bay Area Regions' Median Prices- Condos East Bay December 2021 Market Update
Condo Prices by County East Bay December 2021 Market Update

Home supply peaked at a low level

Despite the increase in single-family home inventory in 2021, we’re still at a historic low. The summer months typically have the highest inventory. In 2021, total inventory didn’t come close to last year’s level and was even further away from pre-pandemic levels. Even though we’re seeing some price correction after the first half of the year, the sustained low inventory will lift prices. Sales in the Greater Bay Area have been incredibly high, again highlighting demand in the area.

East Bay Inventory - Single Family Homes East Bay December 2021 Market Update
Days on the Market East Bay October 2021
MSI by County East Bay October 2021

Homes are selling fast — really fast

Homes are selling faster than at any point in the past 15 years. The Days on Market reflects the high demand for homes in the Greater Bay Area. Buyers must put in competitive offers above the list price of the home. 

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes for sale on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). MSI in the Greater Bay Area is historically low for single-family homes and condos, indicating a sellers’ market.


There are a lot of things to consider before making an important decision like buying or selling a home. If you have any further questions about the market, or are in need of a real estate professional by your side at all times, don’t hesitate to give us a call at 925-415-0835!

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, LIC #01463395


The Big Story

Where can home prices go from here?


Highs (price) and lows (inventory) in the housing market

Income is one of the largest predictors of home price growth, second only to available supply. Consumers have more money to spend, which in turn drives up prices. But the increases in income haven’t kept up with the rise in home prices, especially in the last two years. In 2020, home prices increased 10% according to the Case-Schiller 20-City Composite Index, while median income decreased by 1%.

Case-Shiller 20-City Home Price Composite East Bay November 2021 Market Update


The disconnect between income and home prices is happening for two reasons. First, the ability to take on debt means that income doesn’t necessarily need to increase at a 1:1 ratio with home prices. Second, the pandemic changed buyer preferences, increasing the demand for homes and dropping inventory to previously unseen lows. 

Income Growth Index in California East Bay November 2021 Market Update



Because home price increases outpaced income growth, homebuyers needed to take on more debt to buy a home than they would have a few years ago. But due to the drop in interest rates, the monthly payment, even on a higher-priced home, becomes more affordable. For every 1% decrease in a 30-year mortgage rate, the price of the home can increase 13% without a change in monthly payment (and vice versa). For example, the monthly payment on a $1,000,000 mortgage at 4% is almost identical to the monthly payment for a $1,130,000 mortgage at 3%, a $130,000 difference. 

15 and 30-year Fixed Mortgage Rates East Bay November 2021 Market Update


The pandemic also changed buyer preferences. Rather than spending roughly half of our time at home, which is the norm, we were faced with endless time in our living spaces. (You remember — you were there.) As of September 2021, the United States has 59% fewer homes on the market, and 53% of that happened in the last two years. We were happy to see more homes on the market in the second quarter of 2021 because the increased supply helped satiate the high buyer demand, but we are already seeing the seasonal shift to fewer homes coming to market. Inventory will likely remain super low in the coming fall and winter months. 

The market remains competitive for buyers, but conditions are making it an exceptional time for homeowners to sell. Low inventory means sellers will receive multiple offers with fewer concessions. Because sellers are often selling one home and buying another, it’s essential that sellers work with the right agent to ensure the transition goes smoothly.


The Big Story Data

Housing Inventory in the United States East Bay November 2021 Market Update

Local Update

The market is cooling but it’s still not a buyers’ market


Home prices moved similarly to stocks in 2021

The growth rates in 2021 are highly unusual and unsustainable; for example, home prices would more than double every four years at a 20% growth rate. After huge single-family home price appreciation in the first half of the year, it made sense that prices declined in the third quarter. During the summer months (July–September), Alameda County home prices declined 2% from July through September 2021, up 21% for the year. During the same time period, Contra Costa home prices experienced an even steeper decline: a drop from 28% in June to 16% in September. 

Median Home Prices (Single-Family Homes)

East Bay Median Home Prices Single Family Homes East Bay November 2021 Market Update
East Bay Median Price Changes Single Family Homes
East Bay November 2021 Market Update

Median Home Prices (Condos)

Condo prices are near all-time highs in the East Bay. In the first half of the year, condo prices increased 13% in Alameda and 9% in Contra Costa. In the third quarter, prices contracted in Alameda, up 12%. In Contra Costa, however, prices climbed even higher, up 13% for the year through September 2021. Although the price appreciation wasn’t as pronounced for condos as it was for single-family homes, the growth rates for condos in 2021 are also unsustainable.

East Bay Median Home Prices Condos East Bay November 2021 Market Update
East Bay Median Price Changes East Bay November 2021 Market Update

More supply, no problem (Single-Family Homes and Condos Inventory)

Despite the increase in single-family home inventory in 2021, we’re still at a historic low. August and September are typically the months with the highest inventory every year. In 2021, total inventory didn’t come close to last year’s level and was even further away from pre-pandemic levels. Even though we’re seeing some price correction after the first half of the year, the sustained low inventory will lift prices. Currently, Alameda has more condo inventory than the pre-pandemic levels, but Contra Costa doesn’t. This could explain why condo prices pulled back in the third quarter in Alameda but rose in Contra Costa. Sales in the East Bay have been incredibly high, again highlighting demand in the area.

East Bay Inventory Single Family Homes East Bay November 2021 Market Update
East Bay Inventory Condos East Bay November 2021 Market Update

Homes are selling fast – really fast (Days on Market and Months of Supply Inventory)

Homes are selling faster than at any point in the last 15 years. The Days on Market reflects the high demand for homes in the East Bay. Buyers must put in competitive offers, which, on average, are 5–10% above the list price of the home. 

East Bay Days on Market East Bay November 2021 Market Update



Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes for sale on the market to sell at the current rate of sales. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). MSI in the East Bay has indicated a sellers’ market for over five years now. Currently, both single-family home and condo MSIs are historically low, firmly indicating a sellers’ market.

Days on Market East Bay November 2021 Market Update
East Bay Months of Supply Inventory East Bay November 2021 Market Update
MSI by County September 2021 Market update

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, DRE #01463395

Welcome to our October newsletter, where we’ll explore residential real estate trends in the Greater Bay Area and across the nation. This month, we examine the state of the U.S. housing market now that much-needed supply has come to the market. We also explore why the worker shortage may not be as detrimental to the economy as was originally expected because of the renewed growth of entrepreneurship.  

With the increase in supply, we’ll probably see the beginning of some market cooling — but in the context of the hottest housing market in history. Housing inventory in the United States continued to rise in August, up 30% from the record low in April 2021. We’re happy to see more homes on the market because they will help satiate the high buyer demand. Although this increase in housing inventory is meaningful, there are still 74% fewer homes on the market than a year ago. The housing market will likely start to see some price corrections as it returns to a steadier state of growth. 

While we, at first, worried that the worker shortage could hurt the economy, it looks like the rise in entrepreneurship is helping to boost production and improve the economy. We often look at jobs to gauge the health of the economy: more employed workers usually mean more production and more wealth, which, in turn, means appreciating asset prices. For many months, unemployment stood at around 10 million workers; however, we have started to meaningfully close the unemployment gap, and unemployment has been reduced to 8 million workers. As risks from the delta variant wane, we’ll likely see more unemployed workers reentering the workforce. 

Despite the high rate of unemployment and record number of job openings, U.S. production is climbing rapidly. In terms of GDP, which is the broadest measure of goods and services produced, our economic recovery could reach where we would likely be if the pandemic had never happened within the next year. It cannot be overstated how rare it would be to return to pre-recession GDP, but we might just get there. A potential factor in the rise of both production and job openings is the resurgence of entrepreneurship, which is often associated with higher production. 

We remain committed to providing you with the most current market information so you feel supported and informed in your buying and selling decisions. In order to better explore how the above national trends in the economy and housing market are affecting the Greater Bay Area, this month’s newsletter will cover the following:


Key Topics and Trends in October

In the long term, employment and GDP reveal much about the economic climate and typically trend with housing prices. GDP, according to the U.S. Bureau of Economic Analysis, gained 1.6% quarter-over-quarter in 2nd Quarter (2Q) 2021, which is about 1% higher than the long-term quarterly growth rate of 0.6%. To get back to pre-pandemic GDP levels, we need to continue to outpace the long-term growth rate. The substantial infusion of cash into the economy has boosted GDP, and we are on pace to fully recover. 

The chart below illustrates the cost of the COVID recession and the projection at GDP’s current growth rate. While it depicts U.S. GDP from 2016 to 2Q 2021, it also illustrates economic patterns that occur in all recessions. GDP tends to grow at a fairly consistent rate during economic expansions. The green line exemplifies the expected GDP, had the pandemic never happened. As that green line shows, we are below where GDP was expected to be in 2Q 2021. In other words, we’re still underwater. However, unlike typical recoveries, which return to a steady-state of growth but at a lower level, the current growth rate is far higher than normal and should bring us back to our pre-pandemic trajectory by the end of the 2nd Quarter 2022.

Real GDP in the United States October 2021 Greater Bay Area Market Update

Another Source of Economic Growth

Another large government-sponsored infusion of cash into the economy is very unlikely to happen. We may, however, have another source of economic stimulus: the massive growth in entrepreneurship over the last 16 months. From 2004 to 2019, the United States averaged 2.8 million new business applications per year. In 2020, there were 4.36 million, and in 2021, there have been 3.68 million as of August. This means that over the past 20 months, the United States has seen 8 million new business applications.

The competitive nature of our economy incentivizes new business owners to produce, creating jobs and stimulating growth. While new businesses are not as stable as more mature companies, they are often more nimble than larger companies and can produce with fewer hurdles.

Business Application in the United States October 2021

The large number of new business applications may also explain why established companies have found it difficult to fill job openings. It seems that a large number of workers may now be working for themselves. Although the difficulty with hiring employees poses troubling challenges to employers, it thankfully may not indicate a struggling economy.

Job Openings in the United States October 2021

Home prices tend not to experience meteoric rises if the economy is in dire straits. Because home prices have increased so rapidly over the last two years, we can assume that the economy is doing well. In the last five years, housing inventory has decreased by around 940,000 (59%). Over 700,000 of those homes were sold in the last two years alone. Due to the pandemic, housing demand rose to historically high levels and mortgage rates fell to historic lows. As shown in the chart below, we’re currently hovering near all-time low mortgage rates, which will likely remain for the rest of the year. Low rates incentivize buying due to the lower monthly payment.

Fixed Mortgage Rates October 2021

Even with rising inventory, the market remains competitive for buyers, but conditions are making it an exceptional time for homeowners to sell. Low inventory means sellers will receive multiple offers with fewer concessions. Because sellers are often selling one home and buying another, it’s essential that sellers work with the right agents to ensure the transition goes smoothly.


October Housing Market Updates for the Greater Bay Area

During August 2021, in the Greater Bay Area, the median single-family home price declined further from the all-time high reached in June. Year-over-year, Greater Bay Area prices increased considerably, up 18%.

Greater Bay Area Median Home Price October 2021
Greater Bay Area Median Price Changes October 2021

The median price movements across the Greater Bay Area regions were mixed. San Francisco, Silicon Valley, and East Bay home prices declined month-over-month, while North Bay home prices increased. However, year-over-year, every county in the Bay Area is higher than last year with the exception of Monterey.

Bay Area Regions' Median Prices- Single Family Homes October 2021
Single-Family Home Prices by County October 2021

As you can see in the graphs below, median condo prices were mixed across regions and counties. Counties in the North Bay and Silicon Valley saw the largest gains.

Bay Area Regions' Median Prices - Condos October 2021
Condo Prices by County October 2021

Single-family home inventory began to climb at the start of 2021 in anticipation of the spring season, when more sellers typically come to market, but has begun to decline once again. To gain a full picture of the current market, we must view it in the context of last year. In 2020, fewer people wanted to leave the Greater Bay Area, and more people wanted to move here. This trend drove inventory down to record low levels. New listings, therefore, improve the current market conditions. In August 2021, the total inventory in the Greater Bay Area had fewer homes for sale than it did in August 2020, so the higher number of new listings is a positive development for the housing market. The sustained low inventory will likely cause prices to remain stable or appreciate throughout 2021.

North Bay Inventory - Single-Family Homes October 2021
East Bay Inventory - Single-Family Homes October 2021
Silicon Valley Inventory - Single-Family Homes October 2021

San Francisco Inventory - Single-Family Homes October 2021

Both single-family homes and condos spent less time on the market in August 2021 than they did in August of last year. As we’ll see, the pace of sales has contributed to the low Months of Supply Inventory (MSI) over the past several months.

Greater Bay Area Days on Market October 2021
Days on Market by County October 2021

We can use MSI as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). In August 2021, single-family home MSI remained below two months of supply, indicating that the market still strongly favors sellers.

Greater Bay Area Months of Supply Inventory October 2021
MSI by County August 2021

Summary

In summary, the high demand and low supply in the Greater Bay Area have driven home prices up over the last year, but the huge price appreciation is slowing. Inventory will likely remain historically low this year with the sustained high demand in the area. Overall, the housing market has shown its value through the pandemic and remains one of the most valuable asset classes. The data show that housing has remained consistently strong throughout this period. 

We expect the number of new listings to slow in the coming months. However, the current market conditions can withstand a high number of new listings, and more sellers may choose to enter the market to capitalize on the high buyer demand. We expect the high demand to continue, and new houses on the market to sell quickly.

As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.

Planning to buy or sell your home? Give us a call: 925-415-0835!

Our team is committed to continuing to serve all your real estate needs while incorporating safety protocol to protect all of our loved ones.

In addition, as your local real estate experts, we feel it’s our duty to give you, our valued client, all the information you need to better understand our local real estate market. Whether you’re buying or selling, we want to make sure you have the best, most pertinent information, so we’ve put together this monthly analysis breaking down specifics about the market.

As we all navigate this together, please don’t hesitate to reach out to us with any questions or concerns. We’re here to support you.

Rama Mehra, DRE #01463395

Welcome to our September newsletter, where we’ll discuss residential real estate trends in the East Bay and across the nation. This month, we’ll examine the state of the U.S. housing market now that more supply has come to the market and explore the impact of iBuyers and fin-tech companies’ influences on the housing market. 

From 2012 through 2019, the seasonality of the housing market was incredibly stable. For seven years, we consistently saw fewer sales in the winter months and higher sales in the spring and summer months. In 2020, however, we saw a shift. The usual seasonality gave way to super-high demand that remained consistent throughout the year, even after the initial pandemic shock from April to June 2020 faded. Then, in winter 2020 and early spring 2021, inventory decreased to historically low levels. Now we are far enough into summer to comfortably see pre-2020 seasonal trends return. 

Demand for homes has remained quite high, which has increased the use of all-cash offers that often serve as differentiators for sellers who receive multiple offers. The National Association of Realtors (NAR) reports that cash sales rose from 16% to 23% year-over-year in July. The increase in cash offers often pushes out first-time homebuyers who don’t have hundreds of thousands (or millions) of dollars on hand. At the same time, we are seeing fin-tech iBuyers (algorithmic instant cash buyers), which is still in its infancy, targeting first-time buyers as a means to stay competitive by making them all-cash buyers. This dynamic could drive demand even higher if fewer buyers are priced out of the market.

As we navigate this period of high buyer demand and low supply, we remain committed to providing you with the most current market information so you feel supported and informed in your buying and selling decisions. In this month’s newsletter, we cover the following:


Key Topics and Trends in September

Housing inventory started falling steadily in April 2020 in response to the pandemic, and the steady seasonal norms in supply vanished completely. As you can see from the chart below, we are starting to see a hint of seasonality return with the inventory increase over the summer months, albeit at a much lower level. As inventory crossed below the 600,000 level, sales began to slow; there simply weren’t enough homes to meet buyer demand, which created a hyper-competitive market for buyers. We are pleased to see inventory increase to alleviate some of the extreme demand.

Housing Inventory in the United States East Bay Area Market Update September 2021

The chart below, which illustrates sales over the last 12 months, reveals that sales often trend with inventory, but with a one-month lag. In other words, more sales are recorded when more inventory comes online during the previous month. For most of 2021, even though we were on pace to have a record number of home sales, the rate of sales was slowing. That deceleration, however, has reversed as more homes have come to the market.

Inventory and Sales East Bay Area Market Update September 2021

The last year has taught us that uncertainty around the pandemic has positively correlated to home sales. People are spending more time at home, and the Federal Reserve is expected to keep mortgage rates low. As shown in the chart below, we’re currently hovering at historically low mortgage rates, which will likely remain for the rest of the year. Low-rate financing incentivizes buying, which has been one reason for the high demand over the last 18 months.

30-Year Fixed Interest Rate East Bay Area Market Update September 2021

All-Cash Purchases

The housing market’s competitiveness has increased the number of all-cash purchases to the highest level we’ve seen in the last 10 years. In July 2021, NAR reported that 23% of home sales were cash purchases, which marks a 7% increase from 2020. The competitive nature of the current market has priced out many first-time homebuyers, but we could see that shift with the emergence of iBuyers, who can quickly purchase a home in cash. The speed with which buyers need to secure financing is often part of the problem for first-time buyers. iBuyers can offer the speed and financing necessary for a competitive offer. 

With such low supply and high demand for homes, we could see the market become even more competitive if fewer buyers are priced out of the market. Currently, a low percentage of sales involve iBuyers; however, if iBuyers become more common, supply could trend even lower than it already is.

All-Cash Home Purchases East Bay Area Market Update September 2021

While the market remains competitive for buyers, conditions are making it an exceptional time for homeowners to sell. Lower inventory means sellers will receive multiple offers with fewer concessions. Because sellers are often selling one home and buying another, it’s essential that sellers work with the right agent to ensure that the transition goes smoothly.


September Housing Market Updates for the East Bay

During July 2021, in the East Bay area, the median single-family home price remained the same month-over-month in Alameda County, but declined in Contra Costa County. Year-over-year, both Alameda and Contra Costa continue to show large price increases. Those price gains, however, seem to be decelerating, which is not surprising considering the magnitude of the price increases over the last year.

East Bay Median Home Prices Single Family Homes

Year-over-year, single-family home prices rose significantly in Alameda and Contra Costa.

East Bay Median Price Changes Single-Family Homes

As you can see in the graph below, median condo prices increased in the East Bay; but, like single-family home prices, they remain slightly off-peak.

Condo Prices by County

Single-family Homes Inventory

Single-family home inventory rose slightly over the first seven months of 2021, which is to be expected in the spring/summer season when more sellers typically come to market. In order to gain a full picture, we have to examine total inventory for the first half of 2021 in comparison to last year. In 2020, fewer people wanted to leave the East Bay, while more people wanted to move to the area. This trend drove inventory down to record low levels. New listings, therefore, improve the current market conditions. However, currently, new listings are barely outpacing demand. In July 2021, the East Bay had nearly 650 fewer homes for sale than it did in July 2020, which reflects a 13% decline. Furthermore, when we compare the current inventory to the pre-pandemic levels of July 2019, the number of homes for sale has declined by 30%. Although the seasonal trends seem to be returning, the sustained low inventory will likely cause prices to appreciate throughout 2021.

East Bay Inventory Single Family Homes

Condos Inventory

The number of condos on the market rose slightly in July 2021 as new listings outpaced sales. Condo demand remains incredibly high in the East Bay, and new listings are selling quickly.

East Bay Inventory Condos

Both single-family homes and condos spent far less time on the market in July 2021 than they did in July of last year. As we’ll see, the pace of sales has contributed to the low Months of Supply Inventory (MSI) over the past several months.

Months of Supply Inventory (MSI)

East Bay Days on Market
Days on the Market by County

We can use MSI as a metric to judge whether the market favors buyers or sellers. The average MSI is three months in California, which indicates a balanced market. An MSI lower than three means that there are more buyers than sellers on the market (that is, it’s a sellers’ market), while a higher MSI means there are more sellers than buyers (that is, it’s a buyers’ market). In July 2021, single-family home MSI remained below one month of supply, while condo MSI rose slightly above one month of supply. Both condo and single-family home MSI indicate that the market still strongly favors sellers.

East Bay Months of Supply Inventory September 2021
MSI by County September 2021

Summary

In summary, the high demand and low supply in the East Bay have driven home prices up over the last year, but the huge price appreciation is slowing. Inventory will likely remain historically low this year with the sustained high demand in the area. Overall, the housing market has shown its value through the pandemic and remains one of the most valuable asset classes. The data show that housing has remained consistently strong throughout this period. 

We expect the number of new listings will continue to increase in the remaining summer months. The current market conditions, however, can withstand a high number of new listings, and more sellers may also enter the market to capitalize on the high buyer demand. As we navigate the summer season, we expect the high demand to continue, and new houses on the market to sell quickly.

As always, we remain committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home or condo.

Call us at 925-415-0825 today for any questions that you might have.

Just four months ago, National Association of Home Builders (NAHB) released an article that indicated how 60% of the active home buyers are prefer to buy a newly-built home instead of an existing one. Buyers have stated the top reasons they would opt for a newly built home like having the features that they would have their home, the occurring pandemic, and choosing the exact location of their home.

However, in the recent Housing Trends Report of NAHB for the 2nd quarter of 2021, there is already a change in preference.

Currently, home buyers now prefer to buy existing homes and the percentage of those who would like to buy newly-built homes went down as indicated in the infographic below.

Home Buyers Percentage of those who'll buy existing homes and the percentage of those who would like to buy newly-built homes

9% of those who desired to buy a newly-built home have changed their minds and have now preferred existing homes while others prefer either newly-built or existing homes.

This change in preference is caused by several factors. As more citizens get vaccinated, the fear of being exposed to COVID-19 has settled down. Buyers also saw that the process may move a bit faster when purchasing an existing home since there is a great demand and little supply of builders and materials. Also when buying an existing home, the unexpected costs are very minimal and you even have the hand as a buyer to negotiate the final price.

Are you among those who changed their minds? Or are you those who would still prefer to buy a newly-built home than an existing one? Let us know in the comment below and if you need help in buying, just call 925-415-0835. We know how to make your home buying experience a great one!  

What makes Danville awesome?

Danville is a charming town that has a lot to offer. Their motto even says that. “Small town atmosphere, outstanding quality of life.” From the location, to the people, the what one can do in this town, you will always find something that suits your taste.


Check out our available listings in the area!


Danville California

Danville weather

Average weather in Danville California
from weatherspark.com

If you ask anybody within the town, one of their top reasons why they choose to live here is the weather. According to BestPlaces, the comfort index of Danville when it comes to its climate is 8.5/10. With an average of 260 days of sunny days (205 days is the national average), only 19.3 inches of rain as compared to the national average of 38.1in and 0 inches of snowfall, no wonder the people are loving it here!

Pros and Cons When Living in Danville California
Source: bestplaces.net

How safe is Danville?

How safe is Danville California?
Source: safewise.com

Danville is pretty safe. It’s actually the safest city in California!

It’s violent crime rate in 2021 is 0.5%, 0.4% for both 2020 and 2019. The national average violent crime rate is currently 41%. For property crime rate in Danville, it is 6.6% this 2021, 7.2% in 2020, and 7.8% in 2019, decreasing each year! The national property crime rate is currently at 42%.

It’s safe to say that you’ll definitely have peace of mind while you are in town.

Activities You Can Do in Danville:

When it comes to the things that you can do within the town, the choices are endless!

If you’re a dog lover, you will love Canine Corral.

This beautiful 1.5-acre land is the perfect place for you and your pet to mingle with other dogs and pet lovers in town. Dogs can run free without their leash provided that they are not aggressive, not in season, and not younger than 4 months. You can also bring your children who are aged 9 years and above.

SPORTS:  There are a lot of fields and gyms within the town to keep your body moving. Due to the COVID-19 situation, gyms are still currently closed until further notice.  However, there are also several athletic programs for adults, teens, and kids that would definitely ignite your competitive spirit.  Adults can choose between basketball or softball are a regular sport, or if you want to try something new and unique, try Bocce ball! There is also a regular basketball program for the youth but is currently on hold until further notice. The swimming pool is not currently open and you can apply for aquatics lessons here! If you’re into golf, Danville has lots of country clubs to choose from!

LEISURE: Want to walk around parks and meet new people? Danville has 6! Each park offers unique activities for fun and leisure.

Parks in Danville California

These parks offer lots of activities like horseback riding, plenty of wonderful walking trails, picnic areas, play areas, tennis, volleyball, and even baseball. You’ll definitely not get bored with this place.

Not convinced enough? Here are more reasons to love Danville parks!

ARTS: Are you an artist? Your love for art will never be quenched with the multiple galleries and activities for people like you.

We also have a Village Theater where artists perform every once in a while.

For more lists of fun activities, go here.

Danville Community

No question about it, Danville is bursting with life! The lovely town does not only prioritize fun and leisure, but also the people’s health. Visit the farmer’s market to discover the Taste of Danville to find fresh and delicious produce for any season.  

Danville California

Excited to visit and live in Danville. Call us today at (925) 415-0835 to ask for our available listings in this wonderful community!

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