Market Report: Will Rising Interest Rates Cool Spring Sales?
A New York Times headline recently asked, “Can home prices and interest rates rise at the same time?”
If we had to hazard a guess for our Bay Area clients…
Yes. Most definitely, yes.
In early April, we saw the end of rock-bottom interest rates when the average rate for a 30-year fixed mortgage hit 5%. You might expect higher rates will finally cool our red-hot housing market, sidelining some home buyers and leading sellers to lower their prices.
But the Bay Area is ruled by the relentless forces of supply and demand – and there isn’t nearly enough housing inventory to meet demand. To give you an idea, a modest 1,430-square-foot Vallejo home at 141 Commodore Ct. that was enticingly listed for $597,700 attracted a mind-boggling 48 offers this month.
So, while some other parts of the country are seeing hints of a softening market (Redfin reported a slowdown in online searches and an increase in reduced sales prices on its site), we’re not there yet.
And, if the March market is any indication of things to come, we’re not expecting much curbed enthusiasm from buyers.
Lucky duck sellers
Median sales prices for detached single-family homes continued their pandemic-era climb in March. Here’s where happy home sellers saw the largest year-over-year price increases in the East Bay:
- Lafayette: The median sales price rose 37% to $2.6 million.
- Danville: The median sales price rose 37% to $2,392,500.
- Castro Valley: The median sales price rose 36% to $1,432,599.
- Hayward: The median sales price rose 33% to $1.1 million.
Cracking the code on list prices for buyers
List prices are rarely “transparent prices” in the East Bay. They are more like a “starting point” that leads to counter offers and bidding wars. That’s why an essential part of a real estate agent’s job is tracking how much homes sell for over the list prices, so we can advise buyers how much extra they should budget for this too-common scenario.
In March, detached single-family homes sold over the original asking price in every city we track. Here’s where buyers paid the most over the list price:
- Albany: The average home sold for 37% over asking. The median sales price was $1,375,000.
- Berkeley: The average home sold for 36% over asking. The median sales price hit $1.75 million
- El Cerrito: The average home sold for 35% over asking. The median sale price was $1.3 million.
Where did list prices most closely match the final sales price? In Alamo, homes sold for “only” 6% over the asking price on average (for a median sales price of $2.8 million). In Martinez, the average home sold for 9% over asking (for a median sales price of $947,500).
Home deals are closing as fast as we’ve ever seen in some cities. In Danville, for example, homes flew off the market within six days on average. (That’s half the time it took to sell in Danville last March.) In Walnut Creek, homes sold in seven days on average.
If you’re a seller in these areas, get ready for breakneck deal-making speeds.
What’s been happening in your city?
The following sales data is for detached single-family homes. Sources: Bay East Assoc. of Realtors and Contra Costa Assoc. of Realtors.
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 firstname.lastname@example.org.