East Bay Market Update – April 2022

May 3, 2022

East Bay Market Update – April 2022

As we dive deeper into the spring season, we’re sharing our East Bay market updates and highlights for April. At Connect California Homes, our team of service-focused agents is steadfast in our commitment to advocate for our buyers and sellers as we help them navigate this housing market.

​​​​​​​Ready to take the next step in your real estate journey? We’ll meet you where you are and get you where you want to go with creative strategies and tailored support.

National Market Overview

Home prices in the United States have hit a record high. With historically low inventory, coupled with urgency around rising interest rates, incentivized homebuyers are encouraged to buy sooner rather than later.

​​​​​​​We are entering the spring buying season with the lowest inventory on record. From March 2020 to March 2022, the housing supply declined 62%. And over the past three months 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.

Will rising rates normalize the housing market?​​​​​​​

Already, mortgage rates have risen much faster than expected, with rates rising to 4.67% at the end of March. Although the average 30-year fixed mortgage rate hasn’t risen above 5% in over a decade, it will likely reach this milestone in the second quarter of 2022.

​​​​​​​You can see the stark difference in the following scenarios. 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.

Mortgage rate hikes typically only lower demand in the long term. As the demand increases in the short term, buyers will try to lock in a lower rate while they still can, despite the high home prices.

East Bay Housing Market

Much like the rest of the country, East Bay has seen the same trends of low inventory, rising rates, and high demand.

East Bay Median Home Prices

Home prices continued to climb in March, reaching an all-time high for single-family homes in Alameda County.

​​​​​​​Contra Costa prices didn’t return to peak but are historically high.

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.

East Bay Median Price Changes

Year-over-year, single-family homes and condos are meaningfully higher than last year

  • In Alameda County, price changes are up 23% for single-family homes.
  • In Contra Costa County, price changes are up 6% for single-family homes.

East Bay Inventory – Single Family Homes

Inventory is rising, a historical seasonal norm. However, we are entering into the spring season with the lowest inventory on record.

​​​​​​​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.

East Bay Months of Supply Inventory

Months of Supply Inventory 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. The current MSI in the East Bay market is 0.7 months.

This low MSI further indicates a strong sellers’ market. Homes are selling quickly as buyers compete over the limited inventory.

About Connect California Homes

Founded by Katie Moe in 2022, Connect California Homes is a boutique agency on a mission to transform the real estate service industry in the East Bay.

Built on the principles of authenticity, advocacy, and humility, Connect California Homes is driven by the power of community and the connections of people.

Our team of expert East Bay agents is here to serve, and we look forward to connecting with you and your loved ones for years to come.

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