Market Report: Spiking Interest Rates and Falling Buyer Confidence

Market Report: Spiking Interest Rates and Falling Buyer Confidence

focus on interest rates for home mortgages

Remember when market analysts predicted interest rates would drop in the fall and winter of 2023? That must have been wishful thinking because rates recently hit a 23-year high.

Interest on a 30-year mortgagethe most popular fixed-rate home loan option, jumped to 8% in early October.

Rates have since dropped, very minimally, following the breakout of war in Israel. But economists are predicting we won’t see a significant decrease for the rest of 2023.

Nationwide, home sales are slowing dramatically as rising rates push out would-be buyers. According to a National Housing Survey by Fannie Mae, only 16% of consumers think it’s a good time to buy a home, blaming rates rather than high prices. Meanwhile, potential sellers also may be hesitating, in no rush to give up lower mortgage rates they previously locked down.

Locally, we expect our market will march on despite rates – maybe at a slower pace than we're used to. The Bay Area’s historically low housing inventory ensures buyer demand will keep this market moving.

Here’s what you could expect this fall and winter as a home seller:

  • Would-be buyers sitting on the fence and pickier
  • Move-in ready homes in high demand
  • Conservative pricing strategies to entice more buyers
  • Fewer bids. You’ll still get them, but they won’t come by the dozen like we saw during the pandemic years.
  • Homes sitting on the market a few days longer

Meanwhile, buyers can expect: 

  • No significant drop in interest rates
  • Continued competition for limited inventory
  • Your offer probably won’t be the only one, so don’t be surprised if your agent recommends you bid over the asking price.
  • Homeowners insurance – your ability to get it – could figure prominently in your ability to close escrow. Read our blog post about the California insurance crisis and get tips on how to improve your chances of getting insured.

If a slowdown does hit the local market during the next few months, it will come after a busy September 2023. 

Homes sold faster year-over-year in September 

The most recent sales data shows that detached single-family homes sold faster year-over-year in nearly every city we track. For example, the average home in...

  • San Leandro sold in 12 days, 61% faster than September 2022.
  • Concord sold in 14 days, 52% faster. 
  • Martinez sold in 13 days, 50% faster.
  • Alameda sold in 22 days, 37% faster. 
  • Berkeley sold in 19 days, 5% faster.

Lafayette was one of the exceptions. Homes there sold in 33 days on average, compared to 17 days during the previous September.  

Homes sold for over the asking price in September

List prices continued to be more of a conversation starter than a hard-fast rule. Homes sold for over asking in nearly every city we track, including Berkeley, where homes sold for 22% over asking on average. 

Why? We see two reasons:

  • Teaser pricing. Sellers are setting prices low enough to attract attention and multiple bidders. 
  • Counter offers and bidding wars. Yep, it’s still a thing and will remain so as long as the inventory shortage exists. 

Here's what else happened in September home sales in the East Bay

The following graphs refer to detached single-family homes. Sources: Bay East Association of Realtors and Contra Costa Association of Realtors.

Alameda Home Sales September 2023
Alamo CA Home Sales September 2023
Albany Home Sales September 2023
Berkeley CA Home Sales September 2023
Castro Valley Home Sales September 2023
Clayton Home Sales September 2023
Concord Home Sales September 2023
Danville Home Sales September 2023
El Cerrito Home Sales September 2023
El Sobrante Home Sales September 2023
Hayward Home Sales September 2023
Lafayette CA Home Sales September 2023
Martinez Home Sales September 2023
Moraga Home Sales September 2023
Oakland CA Home Sales September 2023
Orinda Home Sales September 2023
Pleasant Hill Home Sales September 2023
Richmond Home Sales September 2023
San Leandro Home Sales September 2023
Walnut Creek Home Sales September 2023

Don’t see your city of interest here? Get in touch, and we’ll dig up those numbers for you. 888-400-ABIO (2246) or