The 2021 East Bay Housing Market Will Continue to Build on 2020's Surprising Growth.
2020 was surprisingly strong for East Bay real estate. Although many are looking at 2021 as a year to reset, the housing industry is seeking to continue a hot streak that began at the height of the coronavirus pandemic.
Both Alameda and Contra Costa Counties experienced year-over-year increases in both home prices and home sales. Alameda saw prices rise over 15% and home sales increase upwards of 32%. Contra Costa was even more impressive, with home prices increasing 19% and sales rising above 35%.
Fueled by high demand, low interest rates, and changing lifestyle needs, 2020 will prove hard to top. But with similar conditions expected to last well into the new year, optimism is high for the East Bay real estate sector. Let's look at 2021 market insights for the East Bay area to see if the winning streak continues.
The conditions that made 2020 a banner year for transactions remain in place within the East Bay. High demand and low inventory is a recipe for rising home values.
Estimates for the coming year show home prices rising another 7% to 10% across much of the East Bay. This includes popular communities such as Fremont, Pleasanton, and Walnut Creek.
A Seller's Market
Those predicted increases are a direct reflection of the East Bay's lack of inventory. Alameda County, in particular, will prove a challenging market for buyers to navigate, as the area saw less than a month's supply entering the new year.
While low inventory and rising prices mean a competitive market amongst buyers, it's a lucrative one for sellers. The need for more housing is at a peak. New development is lagging thanks to a combination of factors, including rising land and material costs and the larger economic uncertainty cast by the pandemic. Resales will carry the market for some time. Entering 2021, there aren't nearly enough to keep up with demand.
A Return to Seasonality
Barring any significant changes to the market—inside or outside of it—2021 should see a return to the market seasonality missing from last year. The remnants of a transaction-heavy winter will carry over into the spring and summer relocation seasons. However, expect to see activity level off towards the end of 2021.
There could finally be some deals available for buyers patient enough to wait out today's highly competitive market. Although, until supply fully catches up with demand, those late to the market will need to do plenty of due diligence to uncover homes and neighborhoods not fielding multiple offers.
Of course, you can't discuss the East Bay market without mentioning the continuing trend of historically low interest rates. One of the key reasons that demand isn't waning in the face of rising prices is sub-3% interest rates. Better loan terms over the life of a mortgage are enough to bring even the most passive buyers into the market.
Current rates for Alameda County sit at 2.75% for a 30-year fixed-rate mortgage. A 15-year fixed rate is currently 2.26%. Both numbers are effectively all-time lows. There's an expectation the rates will remain at or near those lows for the next few months before starting a gradual upward trend. How high they rise, if at all, will largely be determined by the ongoing health of the housing market. Expect the end of the year to see rates hovering between 3% and 3.25%.
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